China copper smelters raise Q4 treatment charge floor ahead of miner talks

China copper smelters raise Q4 treatment charge floor ahead of miner talks
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SHANGHAI (Sept 29): China's top copper smelters on Wednesday set floor treatment and refining charges (TC/RCs) for the fourth quarter at $70 per tonne and 7 cents a pound, three sources with knowledge of the matter said, as talks with miners on an annual benchmark loom.

The fourth-quarter floor, decided at a meeting of the state-backed members of the China Smelters Purchase Team (CSPT) in Shanghai, is up 27.3% from $55 per tonne and 5.5 cents a pound in the third quarter and up from $58 per tonne and 5.8 cents per pound a year earlier.

Miners pay TC/RCs to smelters to process copper concentrate into refined metal, offsetting the cost of the ore itself. The charges, which go some way toward determining the profitability of smelters and miners, go up when more supply is available for smelters to choose from and they can demand better terms.

The CSPT usually increases the floor, which its members are supposed to adhere to in any spot processing deals, for the final quarter to set out its stall ahead of negotiations with miners on an annual TC/RC benchmark for the year ahead.

The benchmark, which is referenced in supply contracts worldwide, is $59.50 a tonne and 5.95 cents per pound for 2021.

Spot TCs in top copper consumer China have in any case surged some 45% over the past three months and are set for their biggest quarterly gain since the first quarter of 2011.

They were languishing at decade lows of around $30 a tonne as recently as April amid tight supply but have since doubled to $60.50.

Additional copper concentrate supply from the Kamoa-Kakula mine in the Democratic Republic of Congo, which started up in May, has helped eased the tightness.

A group of 15 Chinese smelters - mostly CSPT members - in May agreed to reduce concentrate purchases by 8.8% this year, although China's overall concentrate imports were up 7.5% year-on-year in the first eight months of 2021.