November 20, 2019 / 12:52 AM / 20 days ago

RPT-ASIA COPPER WEEK-Freeport sees sharp drop in copper treatment charges next year

(Repeats previously published item)

* 2020 TC/RC of around $60 per tonne/6 cents per lb seen as reasonable

* New smelting capacity in China adding pressure to TC/RC

* Copper demand fundamentals positive on low inventories

By Shivani Singh

Shanghai, Nov 19 (Reuters) - Freeport McMoRan Inc expects treatment and refining charges for copper concentrates in 2020 to be “well below” last year’s levels as Chinese smelting capacity is expected to rise, a senior company executive said on Tuesday.

For 2020, treatment charges (TC) of around $60 per tonne and refining charges (RC) of 6 cents per lb would be a “reasonable level to settle at”, Javier Targhetta, president of Atlantic Copper and senior vice president for marketing and sales at Freeport told Reuters in an interview during Asia Copper Week in Shanghai on Tuesday.

Top global miners like Freeport and Chinese smelters are currently negotiating for next year’s annual contracts and TC/RCs are widely expected to be below the 2019 level of $80.80 per tonne/8.08 cents per lb.

“New smelting capacity [in China] will come online but mine production will remain more or less flat, which will put pressure on TC/RC,” Targhetta said.

He also added that since more mines around the world were producing high arsenic material, blending clean concentrates with high arsenic copper concentrates was becoming more widespread.

“Smelters will have to adapt to treat higher arsenic concentrates,” he added.

Targhetta said new smelting capacity expected to come online in China next year will treat an additional 3-4 million tonnes of copper concentrates, which means an additional refined copper capacity of around 1 million tonnes.

He said demand for copper, including in China, remained positive in the near term due to “very low levels of inventories” at the London Metal Exchange, Comex and the Shanghai Futures Exchange and at bonded warehouses.

He added that the U.S.-China trade war continues to cast a shadow over copper demand.

“I wouldn’t dare say copper is bullish as it will depend on trade wars ... US, Japan and China, all the big consumption areas will depend on whether the world in general is growing and the world will be in growth mode if the trade war is eventually resolved,” Targhetta said. (Reporting by Shivani Singh in Shanghai; Editing by Saumyadeb Chakrabarty)

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