COVID-19 controls at key China land ports to weigh on copper concentrate supply: sources

Strict COVID-19-related control measures imposed at a key land entry points in China's Inner Mongolia region is expected to pressure the country's copper concentrates supply in the near term, industry sources said June 8.

Authorities have imposed strict orders and suspended public transportation at the Erenhot land port from June 2 to contain rising COVID-19 cases in the area. The land port is a major gateway to import copper concentrate from Mongolia.

As pandemic-related measures delay transportation of copper concentrate, imports from Mongolia could get impacted, sources said.

A total of 357,151 mt of imported copper ore and concentrates were imported into Inner Mongolia in the first four months of this year, accounting for 4.3% of China's total copper imports, data from China's customs showed.

Freight operations at Erenhot were previously disrupted from December 2021 through January after China adopted the zero-COVID control policy.

While most of the smelters in northern China would see no major immediate impact on production since they have been maintaining stocks at elevated levels, any impact on overall domestic supply will depend on how long the control measures at Erenhot last, sources said.

"Transportation of Mongolia's Erdenet copper concentrate through Erenhot entry [point] will stagnate due to the increase in new cases," said a China-based importer.

An ongoing strike at the Las Bambas copper mine in Peru and shipment delays from South America are also weighing on supplies into China.

China's leading copper smelter Xiangguang has been already keeping operating rates at high levels, and supply disruptions out of China are leading to tight supplies, according to sources.

Xiangguang is reportedly operating at 90% capacity, and the smelter still has room to increase its capacity. The Shandong-based smelter resumed production in May after running into a liquidity crisis that shuttered its operations earlier this year.

Copper concentrate prices

The Platts CIF China Clean Copper Concentrates treatment and refining charges were assessed at $75.90/mt and 7.59 cents/lb on June 7, down $8.90/mt and 0.89 cent/lb, respectively, from the year-to-date high on April 26, data from S&P Global Commodity Insights showed.

The copper concentrate TCs were on the decline since late April due to supply tightness in the domestic market.

China's copper concentrate demand is expected to rise from June as domestic smelters end maintenance activities and resume idled capacity, sources said.