TONGLING NONFERROUS METALS GROUP CO.,LTD. March 30 (Reuters) - China's top copper smelters set their floor treatment and refining charges (TC/RCs) for copper concentrate in the second quarter of 2022 at $80 per tonne and eight cents per pound, two sources with knowledge of the matter said.
The rates, decided at a meeting of the China Smelters Purchase Team (CSPT) held online on Wednesday, are up 14.3% from $70 per tonne and seven cents a pound in the first quarter.
While the sources declined to be identified as the meeting was internal, the CSPT told Reuters it had agreed on the $80 per tonne and eight cents per pound as a "guide price" for the April-June period.
Miners and traders pay TC/RCs to smelters to process copper concentrate to refined metal, offsetting the cost of the ore itself. The charges rise when more supply is available, suggesting smelters can demand better terms.
State-backed members of the CSPT, including Jiangxi Copper , Jinchuan Group and Tongling Nonferrous set the floor prices periodically and are supposed to adhere to them in any spot copper concentrate deals.
They had skipped setting second-quarter floor in the past two years amid uncertainties brought about by the COVID-19 pandemic.
"Last year's prices were low and people could not decide in such a market. But, global supplies are good this year and sea transportation has improved, though (they) still face some disruptions," according to an analyst from a state-backed industry consultancy.
Most smelters reached a consensus this year at the meeting for a higher floor price, said one of the sources.
"Our inventories are relatively high at the moment, while second-quarter TC/RCs are also supported by the spot market," he said.
Prior to the setting of quarterly rates, Wang Ruilin, a senior copper analyst with CRU Group had said that global copper concentrate supplies are seen to be in surplus this year and spot concentrate TC/RCs had been increasing in recent months.
Spot treatment charges
Meanwhile, analysts and one source also noted that recent debt crisis at a major private copper smelter Yanggu Xiangguang is leading to market glut in the short term.
The Shandong-based smelter had said on March 25 it had triggered cross default for its debt financing tool as banks had cut its loans.
"Xiangguang consumes around 1.5-1.6 million tonnes of imported copper concentrate per year and had halted production recently. This also added market supplies," said the source.
(Reporting by Min Zhang and Emily Chow, Enrico Dela Cruz; Editing by Muralikumar Anantharaman and Uttaresh.V)
