According to foreign news on November 1, market participants expect copper concentrate processing and refining fees (TC/RC) are unlikely to fall significantly, despite experiencing an 8% plunge in October. The main reason for this forecast is the surge in demand from Chinese smelters for loading in the fourth quarter, while limited spot supply.
Platts clean copper concentrate processing fees fell to $82.20 per tonne on October 31, the lowest level since April 11 and down 14 per cent from the peak on July 31. The main reasons for this decline are high financing costs and the TC/RC increase in the third quarter. Against this backdrop, smelters are keeping inventories low and delaying purchases.
It is worth noting that although the global copper market is well supplied, in China, there is still a certain supply and demand gap due to the procurement strategy of smelting companies and demand growth. Specifically, China's cathode copper production rose 18 percent year on year in January-September, but copper concentrate imports rose only 7 percent in the same period. This supply and demand pattern further indicates that while the global copper market is well supplied, in China, there is still a supply and demand gap due to smelters' purchasing strategies and demand growth.
In addition, the TC spread between Asian blended copper concentrate and standard clean copper concentrate narrowed from $10 per tonne in September to $2-3 per tonne on October 31. This may be due to the fact that many Chinese smelters are seeking to increase concentrate inventory levels. In fact, Chinese smelters traded 419,000 tonnes of copper concentrate in October, compared with an average of 153,000 tonnes from January to September. The data suggests that Chinese smelters increased their purchases in the fourth quarter.
