TOKYO, Jan 18 (Reuters) - Pan Pacific Copper (PPC), Japan's biggest copper smelter, has mostly agreed with producers on treatment and refining charges (TC/RCs) for 2017 that are 5 percent lower than last year, amid tighter supplies, two sources familiar with the matter said.
"We have mostly agreed to TC/RCs for this year at $92.50 a tonne and 9.25 cents a pound although some negotiations are still continuing," a source directly involved in the annual pricing talks told Reuters on Wednesday.
He declined to say which miners the Japanese smelter has signed the deal with.
This is the second annual cut in a row and is down from $97.35 per tonne and 9.735 cents a pound for 2016 term contracts as a surge in supply mostly from Peru begins to fade out.
The deal is in line with an agreement over 2017 TC/RCs by diversified miner Freeport-McMoRan Inc and China's biggest copper smelter Jiangxi Copper last year.
Freeport has secured a 5 percent drop in charges it will pay Jiangxi Copper to process its concentrate for 2017, people familiar with the matter said in November, in a deal that will set the benchmark for the region.
TC/RCs are paid by miners to smelters to refine concentrate into metal and are a key part of the global copper industry's earnings.
PPC, which is 67.8 percent owned by JX Holdings Inc and 32.2 percent by Mitsui Mining and Smelting Co Ltd, cut its term premiums for 2017 refined copper supply contracts in China by 31 percent to $72 per tonne, two sources familiar with the matter said this month.
The cut, which underlines slower demand growth in China, is in line with the move by the world's leading copper producer Codelco which has slashed its 2017 term premiums to China by more than a quarter, reducing them to their lowest level since 2009.
In November, PPC President Yoshihiro Nishiyama said he expects its 2017 term premiums to China to be near $72 per tonne, down from $105 per tonne in 2016. (Reporting by Yuka Obayashi; Editing by Christian Schmollinger)