Spot trades for copper concentrates surge in March on Xiangguang output cuts

Spot trades for copper concentrates in Asia surged in March following a production halt by major Chinese copper smelter Shandong Xiangguang Group in the month, information compiled by S&P Global Commodity Insights showed April 1.

A total of 44 spot transactions were observed in March, the highest number seen in a single month since the launch of the Platts CIF China copper concentrates assessment by S&P Global Commodity Insights in February 2021.

The March total compared with 30 in February, and was more the double the 20 spot trades observed in March 2021.

A total of 291 spot copper concentrates transactions were observed by S&P Global over February-December 2021, and 108 spot trades over January-March 2022.

Of the 44 spot trades seen in March, 32 were bought by Chinese smelters or Chinese traders, and 12 were traded between international traders and producers.

After Shandong Xiangguang ceased production in the first week of March, many contractual sellers rushed to reallocate the clean copper concentrates that were cancelled by Xiangguang.

As a result, many prompt shipments were offered in the first half of March, which pushed spot TCs to the highest level seen since Platts launched copper concentrates assessments in February 2021.

The Platts CIF China Clean Copper Concentrates treatment and refining charges were assessed at $79.20/mt and 7.92 cents/lb respectively March 31, by 22% from Feb. 28 and up 172% from March 31, 2021.

Some copper concentrates cargoes originally destined for a Japanese smelter were also diverted to China recently due to unplanned maintenance by that smelter, which added to the supply pressure in the Asian market.

The majority of spot transactions observed in March were for standard clean concentrates, as some larger smelters with a preference of super clean copper concentrates placed advanced bookings in a bid to secure and increase inventory levels.

"It is not a matter of price, we just only have spot appetite for standard clean concs," a smelter source said.

Due to the low spot liquidity of non-standard copper concentrates, traders allocate materials through term contracts or swaps with other parties to meet smelter quality requirements.

Meanwhile, 11 of the spot shipments bought by Chinese smelters in March were said to have low gold content of less than 1 gram, which is a preferred quality in clean copper concentrates.

The near-term market expectation is that spot TCs will continue to test higher in April due to the easing in supply, but spot activity may slow as the Xiangguang cargoes have been digested and sellers feel less urgency to offer.