Copper miner Freeport-McMoRan and Chinese smelter China Copper International have agreed on the 2021 contractual treatment and refining charges at $59.50/ton (5.95 cents/lb), market sources told S&P Global Platts Dec. 14.
The 2021 price is $2.50/ton lower from the 2020 benchmark, but in line with market expectations.
A source from China Copper confirmed the price to Platts. "We have agreed with Freeport at $59.5, and other Chinese smelters agreed with this price as well," the source said, adding that the other producers are yet to decide on the annual contract prices.
Freeport did not immediately respond to a Platts request for comment.
The development comes as China faces shortage of clean copper concentrates. Meanwhile, Chinese restrictions on the import of Australian copper concentrates has further tightened the short-term supply of raw materials in the domestic market.
A recent tender for Chilean clean concentrates was concluded at low-30s, while spot deals concluded between traders and smelters settled at high-40s.
Although annual negotiation this year is a challenge, industry sources do not expect contract prices to drop to spot levels.
"Increase in smelters' production capacity is limited in 2021, which does not support for TC [treatment charge] to go down by much," a smelter source said.
An international trader added that mid-$60 is the breakeven level for Northeast Asia-based smelters, and if treatment charges go down by much, it would be difficult for other regional buyers to accept.
