A leading observer of copper markets says they are in an historic moment with Chinese smelters paying premiums for raw material copper concentrate while selling their finished product at a discount.
Fastmarkets reports that copper concentrate, used for copper smelting, is priced according to treatment and refining charges (TC/RCs). It notes the charge usually falls amid tighter supply.
Historic first
‘Fastmarkets’ benchmark copper concentrate TC/RC index fell into negative territory on 26 April, marking the first time the index traded as a negative number since Fastmarkets started to track the market in 2013,’ the report says.
Meanwhile, also for the first time, copper cathodes are trading at discounts for units being imported into China. Fastmarkets’ daily assessment of copper grade A premium, cif Shanghai was at the lowest level recorded and trading in negative terms for the first time.
Market participants told Fastmarkets these extreme conditions were unsustainable.
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Two points that need to be made regarding the copper markets. First, the closure of a Panamanian mine earlier this year rocked the market for copper concentrates, and drove “TC/RC” charges to unsustainable levels due to a lack of material. Second, US premiums for prompt copper shot up to levels that make the US the best market in the world for copper cathodes. It isn’t clear that these two occurrences are related.