December 29, 2017 / 5:17 AM / a year ago

UPDATE 1-China's copper smelters cut treatment, refining charges for Q1 2018

* China’s copper TC/RCs for Q1 2018 to be $87/8.7 cents

* New charges remain higher than the 2018 benchmark

* Lowered TC/RCs indicate waning confidence on copper supply (Adds comment, industry context)

BEIJING, Dec 29 (Reuters) - China’s copper smelters on Friday lowered the floor for their treatment and refining charges (TC/RCs) in the first quarter of 2018 by 8.4 percent, signalling tighter supply of copper concentrate in the first three months of the New Year.

The 10-member China Smelters Purchase Team (CSPT) set the minimum level for treatment fees at $87 per tonne and for refining charges at 8.7 cents per pound during a meeting in Shanghai, a CSPT representative told Reuters.

That compares to $95 per tonne and 9.5 cents per pound in the fourth quarter of 2017.

Miners pay the TC/RCs to the smelters, for whom the charges are a vital source of revenue, to process their ore.

The CSPT meeting comes just days after it emerged that China’s top copper smelter Tongling Nonferrous Metals Group had agreed with miner Freeport-McMoRan Inc to set the 2018 benchmark TC/RCs at $82.25 per tonne and 8.225 cents per pound, an 11 percent drop from the 2017 benchmarks.

“You cannot compare this with the (2018) benchmark. It’s up to the spot supply and demand,” said the CSPT representative.

The level agreed for the annual benchmark plays a large role in the profitability of both sides.

The quarterly TC/RC charges, on the other hand, are set unilaterally by the CSPT as a floor that its members, which include Tongling Nonferrous and other heavyweight smelters like Jiangxi Copper Co, are supposed to observe.

Charges go up when supply is considered to be abundant and down when it is considered tight.

Before Tongling Nonferrous and Freeport struck a compromise, the two sides were too far apart, in terms of how high they thought the TC/RCs should be, to agree the benchmark at the Asia Copper Week gathering in Shanghai in late November.

Miners claimed the TC/RCs should come down due to tightening supply, whereas the smelters were pushing to keep charges flat, arguing there was no deficit. (Reporting by Muyu Xu and Tom Daly in BEIJING; Additional reporting by Ruby Lian in SHANGHAI; Editing by Kenneth Maxwell)

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