London 22/01/2016 - Spot copper treatment and refining charges (TC/RCs) have dropped further over the past two weeks due to restocking by smelters in China ahead of the Lunar New Year and aggressive tender bids from traders.
A benchmark for 2016 contracts has been set, with miner Freeport-McMoRan and Chinese smelter Jiangxi Copper agreeing annual TCs of $97.35 per tonne/9.735 cents per pound earlier today - the same level as previously agreed with Antofagasta.
Although the TC/RC level has been agreed, other contractual terms are still being negotiated - a final agreement is expected by Monday, a source close to the negotiations told FastMarkets.
Amid a more liquidly traded spot market, average global spots TC/RCs for clean, standard-grade copper concentrates have dipped to their lowest in more than four months at $83-93/8.3-9.3 cents from $89-99 /8.9-9.9 cents two weeks ago.
"I think miners have gained an upper hand in the spot market recently," a trader in China said.
Copper concentrate purchases by smelters were quoted in a range of $90-98/9.0-9.8 cents, down from $95-103/9.5-10.3 cents, while sales from miners to traders slipped to $78-86/7.8-8.6 cents from $85-93/8.5-9.3 cents.
Most smelters have been absent from the spot market over the past two weeks - small Chinese smelters and some members of the Chinese Copper Smelting Purchasing Team (CSPT) have been the only real buyers.
After refraining from spot buying throughout the lengthy annual contract negotiation period, some Chinese smelters have made purchases to cover feed requirements. Still, those in Japan, Korea and Europe remain well stocked.
A temporary lack of supply from state-run copper mines in China, which will be operating at reduced capacity before and during the coming New Year holidays, has boosted local demand.
"Smelters are in a bit of a hurry to restock tonnages before the New Year holiday - especially those small ones," a trader in China said.
Spot and annual deals should pick up in the coming month due to the benchmark being reached today, with many in the market reluctant to trade while there was still uncertainty over what the final settlement would be.
"I think it's good that the number has been settled. Obviously, it is the same numbers, which works, otherwise [there would] have been a protracted further discussion about which number to follow. This will certainly facilitate the ongoing [annual] discussions," a second smelter said.
While annual contracts between miners and smelters continue, traders have been busy securing tonnages from mines through tenders for 2016 availability. Terms in winning bids by traders have been competitive, with lower TC/RCs seen into the high $70s/7 cents.
The numbers indicate continued appitite for blending, despite lower quantities of complex, high-arsenic material being on offer in the market.
But there are indications that the supply of clean concentrates will steadily increase over the coming year - MMG's new Las Bambas copper mine in Peru made its first shipment of around 10,000 tonnes of copper concentrates to Jiangxi Copper this week.
In addition, PT Freeport Indonesia - the wholly owned Indonesian subsidiary of Freeport-McMoRan - has reportedly had its rolling six-month licence to ship copper concentrates from its Grasberg mine renewed.
(Additional reporting by Archie Hunter, Vicky Chen and Ian Walker, editing by Mark Shaw)