China's copper concentrate treatment charges are likely to remain subdued well into the second quarter of 2021 as global copper concentrate supply remains stubbornly low amid a raft of logistical challenges across the globe.
The CIF China clean copper concentrate treatment and refining charge or TC/RC was assessed at $39.8/mt or 2 cents/lb Feb. 3, down 20 cents/mt from Feb. 2. S&P Global Platts launched the assessment Feb. 1.
Smelters were heard bidding at $40/mt for March loading clean concentrate, and one seller source expected smelters would soon lower bids to the high $30s/mt. Prior to the pandemic, TC/RCs -- the fees paid to smelters by mines for converting copper concentrate to copper cathode and a key revenue source for smelters -- were typically double that level.
Clean copper concentrate to the rest of Asia was heard in the mid-$40s/mt for miner to smelter terms this week, with bids from Chinese end-users the most aggressive.
This comes after China's copper concentrate imports fell 1.1% year on year to 21.77 million mt in 2020, customs data showed, posting the first year-on-year decline since 2011, and supply shows no signs of rebounding in the current quarter. China accounts for more than 50% of global copper concentrate treatment and refining.
The decline in imports was due mainly due to production disruptions in South America, delayed shipment schedules due to the pandemic and an import ban on Australian concentrate, which was partially offset by a surge in imports from the US and a rise in global copper prices that spurred an increase in domestic concentrate production.
Rough seas that closed ports in northern Chile for more than 20 days in January are still resulting in shipment delays to all buyers from the world's largest copper producer. While loading activities had resumed by end January, it will take some time to clear the backlog, market sources said.
In Peru, a COVID-19 resurgence, disrupted logistics and a strike that saw China Minmetals halt operations at its Las Bambas copper mine over December to mid-January have made producers cautious about offering spot cargoes due to the potential for shipment delays. Las Bambas accounts for 16% of Peru's copper production.
In addition, China imported no copper concentrates from Australia last December, down from 110,931 mt a year earlier, while imports over 2020 were down 25.6% year on year at 783,476 mt, as the country continues to rebuff its closest main supplier due to bilateral political tensions.
Australia had accounted for 5% of China's total copper concentrate imports in 2019, and the continuing tensions have pushed buyers into sourcing cargoes from other regions. China imported 7.72 million mt copper concentrate from Chile and 4.81 million mt from Peru in 2020, accounting for 35.5% and 22.1% of its total imports, respectively.
Demand recovery
Demand for refined copper has increased in Europe, the US and Japan in recent weeks, and although treatment charges remain low, smelters are motivated to maintain production at high levels, boosted by strong downstream demand.
China imported 192,000 mt of copper concentrate from the US in 2020, surging from 18,000 mt in 2019. Despite trade tensions between China and the US, unexpected maintenance at US smelters has boosted sales from the US to China. However those imports are likely to decline as US smelters ramp up production, and no spot offers of US origin have been heard recently.
The International Copper Study Group has forecast that copper ore and concentrate production will increase by 4.6% to 21.15 million mt in 2021, but with supply continuing to be constrained by logistics, the expanding production is unlikely to have an impact until the second half of the year.
