China’s top copper smelters have agreed on a price guidance for third-quarter copper concentrate processing treatment and refining charges (TC/RCs) that is the lowest since at least 2015, according to two sources familiar with the matter.
At a meeting of the China Smelters Purchase Team (CSPT) in Shanghai, the attendees set the guidance prices at $30 per metric ton and 3.0 cents per pound. This is less than half of the first-quarter guidance of $80 per ton and 8.0 cents per pound, and is the lowest on record according to Reuters data dating back to the third quarter of 2015.
Despite the sharp drop from previous quarters, the latest guidance prices were still higher than current spot levels, as smelters expected the supply shortages to moderately ease in the next few months.
The TC/RCs are a key source of revenue for smelters and are paid by miners when they sell copper concentrate to be refined into metal. A lower charge signals less supply, which started with the December closure of the Cobre mine operated by First Quantum in Panama.
Meanwhile, demand in China has increased as smelters ramped up their capacity, with the country’s refined copper output growing 8.2% in the first five months of this year compared to the same period in 2022.
The low guidance prices set by the CSPT, which consists of over 10 top Chinese copper smelters, reflect the tight concentrate supply situation that has persisted in the global copper market. However, smelters expect the situation to improve moderately in the third quarter.