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UPDATE 1-China copper smelters to cut concentrate purchases to lift treatment charges -Antaike

05/10/2021 06:31
UPDATE 1-China copper smelters to cut concentrate purchases to lift treatment charges -Antaike

Updates copper price; adds detail on Monday's rise in spot treatment charges

- A group of 15 key copper smelters in China has agreed to cut purchases of raw material copper concentrate in 2021 by 8.8% on the year, state-backed research house Antaike said, in a bid to boost flagging treatment and refining charges (TC/RCs).

Copper prices CMCU3 hit a record high above $10,700 a tonne on Monday, but TC/RCs AM-CN-CUCONC - paid by miners to process concentrate into refined metal - are a key source of revenue for smelters and have been languishing near decade-lows amid tight supply. nL1N2MU0CE

In a note on Saturday, Antaike said the 15 smelters reached a consensus to cut concentrate purchases by 1.26 million tonnes from last year, or about 300,000 tonnes on a metal content basis, and expand use of alternative raw materials, such as copper scrap and blister, a partially purified form of copper.

China is the world's top copper consumer and the biggest producer of refined copper. Its biggest overseas concentrate suppliers are Chile and Peru.

One reason for the move is to accelerate a push towards low-carbon production, as China's nonferrous metals sector aims for peak emissions by 2025, said Antaike, the research arm of the China Nonferrous Metals Industry Association. nL1N2M007E

Another reason is to halt the slide in spot TC/RCs and "stimulate a rebound" in long-term TC/RCs in 2022, it added.

Lower concentrate purchases should ease supply tightness and lead to higher TC/RCs as smelters that need feedstock face less competition.

On Monday, spot copper treatment charges in China AM-CN-CUCONC, as assessed by Asian Metal, nudged up $1 to $33.50 a tonne but they are still down 33.7% year-to-date and only $3 above last month's 10-1/2-year low of $30.50.

The annual TC benchmark, referenced in term supply contracts worldwide, was agreed at $59.50 per tonne for 2021, marking a sixth straight yearly drop. nL1N2IU0S4

China's copper concentrate imports in the first four months of 2021 were up 4.4% on the year, at 7.88 million tonnes. nL1N2MU06D

(Editing by David Evans and Clarence Fernandez)