Tight supply drags copper processing costs to less than US$20 per ton
The supply of copper ore is extremely tight, and the spot handling cost of concentrate has been pushed to the lowest level in more than 10 years. Three sources said that in the recent tender, the transaction price between miners was less than US$20 per ton.
Processing and refining fees (TC/RCs) paid by miners to smelters rise when supplies are sufficient, and fall when smelters are forced to compete for scarce materials.
The copper shortage pushed the refined price to a 10-year high of $9,617 per ton last month, and many analysts expect the price to rise further.
Industry information provider Asian Metal said that China’s spot TCs, which have about half of the world’s copper smelting capacity, are currently at their lowest level since October 2010, at US$33.50 per ton. S&P Global Platts (S&P Global Platts) on Thursday assessed that China's spot copper TCs fell to US$30.90 per ton.
According to sources, traders even accepted lower interest rates in order to guarantee supply.
According to two people familiar with the matter, Antofagasta's Centinela mine in Chile bid for 10,000 tons of ore in April at a price of $10 last week.
An unnamed source said that traders are willing to buy ore with very little impurity at a price of $20 and below.
Mauricio Ortiz, Antofagasta's chief financial officer, said he could not disclose the details of the sale, but "from our point of view, the market is positive."
An Asian trader said that another recent bid for South American concentrate was $19 per ton.
Although good news for miners, low TC/RCs are squeezing the profits of smelters.
The China Smelter Purchasing Group (CSPT), composed of state-backed copper producers, will meet later this month to determine the lowest price for TC/RCs in the second quarter, and members will abide by that price.
Its floor price in the first quarter was $53 per ton.
"No Chinese smelter is willing to accept a price lower than US$30," said a source close to CSPT, who declined to be identified due to the sensitivity of the matter.
