Copper concentrate TC/RCs for smelters flatten

Copper concentrate TC/RCs (treatment and refining charges), the fees that smelters charge miners to process copper concentrate into refined copper, appear to have levelled out, with multiple weeks of flat spot purchasing from smelters.

This comes as copper concentrate TC/RCs have been at aggressively low levels for over a year, caused by a state of extreme misbalance between smelting capacity and concentrate production.

Whether this is the bottom of the market or a temporary pause is currently uncertain.

What level are TC/RC tenders at?

This week, a major miner’s tender result reportedly closed at -$45/-4.5¢ for a smelter purchase. This level is the same as their last tender and only $1/0.1¢ from the one before that. The last month or two has seen some degree of stabilisation for TCs. TCs have stayed in a $3.50 range since April 28, having moved over $40 in the 3 months prior, according to MySteel Data.

“Generally it’s quiet and nothing is shaking the market,” one trader told Benchmark, noting the market had raced down to the -$40s but was now stagnating.

Will the stabilisation continue?

In conversations with Benchmark, sources noted that prompt months were well covered for smelters and that this might be slowing imminent demand but not mean the market would stay stable.

“June and July [are] covered, August there is more interest,” the trader source told Benchmark. This view was shared by a number of participants, with some noting the market may go down again in the coming months.

Additionally, there are some significant long-term negotiations taking place such as Antofagasta negotiating with Asian smelters for midyear contracts. The offers reportedly started from Antofagasta at -$15/1.5¢—well above spot levels—but have apparently been resisted heavily by smelters.

The importance of these mid-year discussions might cause some smelters to wait to see the result and pull back slightly from spot market activity. Smelters are also keen to not give the impression that the spot market is falling.

It is also possible, however, that at -$45/4.5¢ the market is so low that smelters aren’t willing to keep dragging the market lower.

“Below this level is really not great economically,” one miner told Benchmark. A second trader told Benchmark, “I think this is the bottom.”

Traders continue to buy concentrates well below smelter buying level, with bids by traders on the aforementioned tender reportedly -$85/8.5¢. The spread between smelter and trader buying is already unprecedentedly large, so there may be little room for smelter buying to fall lower unless smelter’s TCs also decline.

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