SHANGHAI (Reuters) – China’s top copper smelters decided not to set second quarter guidance for copper concentrate processing treatment and refining charges (TC/RCs) at a meeting on Monday, source said, as the industry grapples with an acute shortage of concentrate.
The scramble for stock has kept spot TC/RC prices negative since December, resulting in a benchmark price so disconnected it has become meaningless, said a source at the China Smelters Purchase Team meeting in Shanghai.
The CSPT has never set negative price guidance, said a second source, who also spoke on condition of anonymity.
“We still feel the copper concentrate supply tightness might last throughout this year and potentially next year because of smelters’ expansion,” a third source from a smelter said.
TC/RCs, a key source of revenue for smelters, are a gauge of availability for copper concentrates used in the production of refined copper.
A negative TC/RC means smelters must pay miners or traders to convert concentrate into refined metal, rather than receiving payment for the service.
Shanghai Metals Market copper concentrates TC/RC index was -$24.14 per metric ton and -2.41 cents per pound on March 28.
The second and a fourth source speaking on condition of anonymity said planned maintenance in the second quarter also made guidance less important because they would not be buying as many spot cargoes.
Several copper smelters across top consumer, China, have already begun equipment maintenance, opting to shut down plants in the traditionally peak demand period of March to stem losses from the shortage.
The first-quarter guidance was $25 per ton and 2.5 cents per pound.
(Reporting by Violet Li, Amy Lv and Lewis Jackson in Beijing; Editing by Jamie Freed, Sherry Jacob-Phillips, Rashmi Aich and David Evans)
