Copper spot treatment and refining charges on the rise

19 November 2008 | 03:08 Code : 18361 Geoscience events
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Spot treatment and refining charges (TC/RCs) paid to Chinese copper smelters....

Spot treatment and refining charges (TC/RCs) paid to Chinese copper smelters have risen 20-40 percent in the past month, as overseas traders have cut stocks triggered by falling metal prices and increased costs of trade finance.Copper smelters in China, the world’s top consumer of the metal, were receiving TC/RCs of $60-$70 a tonne and 6-7 U.S. cents a pound for turning spot imported concentrates into metal, up from around $50 and 5 cents last month, smelter officials and traders said.Supply has increased," said a trader at an international trading house.The trader said trading houses had sold concentrate stocks because of falling copper prices. He added that increased costs for trade finance in international markets were also encouraging the trading houses to reduce stocks.Costs of trade finance -- the credits that oil the wheels of international commerce -- have soared because the global credit crunch triggered by the global financial crisis had put an additional premium on liquidity.Prices of copper for delivery in three months MCU3 on the London Metal Exchange have fallen 46 percent since Sept. 15 to $3,764 a tonne on Friday. Copper has lost 58 percent in value from the July record high.An official at China Smelters Purchase Team said member smelters had bought concentrates at TC/RCs of $70 and 7 cents for Laos and Turkey origins and of above $60 and 6 cents for clean, medium grade concentrates with Western origins."The rise has been obvious in past 3 weeks. But Chinese smelters are not keen to import a lot, given falling prices, which are increasing risks," the official in Shanghai told Reuters on Friday.But the trader said the extra supply was drying up and that would limit the rise in the TC/RCs.TC/RCs are paid by overseas copper concentrate sellers to Chinese copper smelters, and then deducted from the sale price, based on metal prices.The China Smelters Purchase Team groups the country’s top copper producers, including Jiangxi Copper (0358.HK) (600362.SS), Tongling Nonferrous 000630.SZ and Yunnan Copper 000878.SZ, which eat up about 80 percent of China’s concentrate imports.Member smelters have received term TC/RCs of $47.2 and 4.72 cents for this year’s concentrate imports, the lowest level since 2004.China, which produces less than one-third of its concentrates, imported 3.9 million tonnes of copper concentrate in the first nine months of the year. (Edting by Karen Foster)


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