March 24, 2020 / 5:08 AM / 12 days ago

China copper treatment charges fall as coronavirus threatens ore supply

* China spot copper TCs down 5.5% to $68.50/T, first drop in 2020

* Virus puts top copper miners Chile, Peru in states of emergency

* No sign of China smelters holding qrtrly meeting to set TC floor

BEIJING, March 24 (Reuters) - Charges for processing copper concentrate in China have fallen for the first time since December, as the coronavirus outbreak and associated curbs hit operations at overseas mines and leave smelters uncertain over future supply.

Spot copper treatment charges (TCs) AM-CN-CUCONC, paid by miners to smelters to process ore into refined metal, sank by $4 a tonne, or 5.5%, to $68.50 a tonne on Monday, according to industry pricing and information provider Asian Metal.

Lower charges point to a tightening copper concentrate market, and the sudden, sharp drop illustrates how the fast-spreading coronavirus has upended the supply chain in a matter of weeks.

Only last month, smelters in China, the world’s top consumer of the metal widely used in power and construction, were cutting production and turning back concentrate cargoes as the virus caused logistical headaches and a collapse in demand.

Now, as Chinese consumption recovers, miners in countries, including top producers Chile and Peru, are reducing operations, putting ore supply at risk.

“Chinese smelters are going gangbusters and worried where their concentrate feed will come from,” one mining source said.

Wang Ruilin, a copper analyst at CRU Group, said concentrate shipments from Peru had already been hit but those from Chile had not been so far.

“The situation is not likely to improve in the short term,” she added.

One smelter source said he expected weak consumption would persist a while longer “but after that maybe the supply issue would be more serious”, adding that China relied “too much” on imported raw material for copper.

Spot TCs, a key source of revenue for smelters, rose to a near one-year high of $72.50 a tonne earlier this month, boosting smelters’ finances in the face of plunging copper prices, which hit a near 11-year low in Shanghai on Monday.

The China Smelters Purchase Team (CSPT), a group of 12 major copper smelters, typically meets in late March to set floor treatment and refining charges (TC/RCs) its members are supposed to observe in spot processing deals in the second quarter.

Four smelter sources who usually attend the quarterly meeting said they had not been given a date, pointing to the epidemic as the reason for the delay.

One official on the team said the meeting had been “cancelled,” without elaborating.

CSPT members include Jiangxi Copper Co, Tongling Nonferrous and Daye Nonferrous, which is based in the virus epicentre of Hubei province.

Reporting by Tom Daly and Shivani Singh in Beijing, Mai Nguyen in Singapore, Emily Chow in Shanghai and Melanie Burton in Melbourne; Editing by Subhranshu Sahu

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