London 17/08/2016 - Annual copper treatment and refining charges (TC/RC) for 2017 should settle for at least three digits, Chinese smelters surveyed by FastMarkets said.
Negotiations on the term - a discount to the LME prices - at which miners will sell concentrates to smelters in 2017, are expected to start earlier this year. Participants said it would take place in September as opposed to last year, when it took place in October during LME Week.
"We will start [the discussion] in September and my expectation is $100 - or more," a leading player in the Chinese Copper Smelting Purchasing Team (CSPT) told FastMarkets.
“Chinese aim for a three-digit benchmark [for 2017],” a second CSPT member said.
CSPT are a group of China's largest smelters, the majority of which are state-owned companies, including Jiangxi Copper and Tongling Nonferrous Metals. The group are seeking for more bargaining power in the talks - at their quarterly meeting they lifted the lower limit of purchases for the third quarter to $103.
“I expect $100 as the benchmark because the spot market has stayed above $100 since May,” a third smelter in the same group said, adding that the number is a “consensus” among smelters.
Spot TC/RCs to smelters were last at $100-105 per tonne/10-10.5 cents per pound - a level they have maintained since late June after hitting $100/10 cents in late May, according to FastMarkets' assessments.
“It’s the easiest year to make a forecast based on the spot level and the oversupplied market, but it would be the hardest year to nail down the number as lots of pressure has been put on miners' negotiating teams by their superiors,” the first smelting source noted.
2016 annual TC/RCs benchmark was settled at $97.35 per tonne/9.735 cents per pound between Chinese smelter Jiangxi Copper and Chilean miner Antofagasta. US miner Freeport-McMoRan eventually followed the same number after longer-than-usual negotiations with the Chinese.
(Editing by Kathleen Retourne)