China’s leading copper smelters have decided against providing guidance for the second quarter regarding copper concentrate processing treatment and refining charges (TC/RCs), as confirmed by industry sources. This decision comes amid significant challenges in procuring enough concentrate, which has led to persistent shortages in the market. Since December, the ongoing struggle to acquire stock has caused spot TC/RC prices to slip into negative territory.
As a result, the benchmark price has diverged from market realities, rendering it virtually meaningless, according to insights shared during the China Smelters Purchase Team (CSPT) meeting in Shanghai. Notably, this marks an unprecedented event, as the CSPT has never previously set negative price guidance. Industry insiders predict that the tightness in copper concentrate supply could persist throughout the year and potentially into the next, primarily due to the ongoing expansion of smelting operations.
TC/RCs are crucial for smelters as they represent a key revenue stream and indicate copper concentrate availability for refining into metal. A negative TC/RC means that smelters are required to pay miners or traders for transforming concentrate into refined metal instead of receiving a fee for the service. As of March 28, the Shanghai Metals Market reported a copper concentrates TC/RC index of -$24.14 per metric ton and -2.41 cents per pound.
Sources have raised concerns that planned maintenance during the second quarter could further diminish the relevance of guidance, as companies are likely to limit their purchase of spot cargoes. Many smelters in China have already commenced maintenance work, choosing to shut down facilities during a typically high-demand period in March to mitigate losses stemming from the supply shortage. In comparison, guidance for the first quarter was set at $25 per ton and 2.5 cents per pound.