China's top copper smelters hike Q4 treatment charge floor price to 4-year high on ample supply

China's leading copper smelters have set the floor price for copper concentrate treatment and refining charges, or TCs/RCs, for the fourth quarter at $93/mt and 9.3 cents/lb respectively, the highest level in more than four years, industry sources said Sept. 27.

The rise in TCs/RCs indicates that local markets have an elevated supply of copper concentrate, the sources said. Most Chinese smelters are holding high inventories of raw materials and demand in Q4 is projected to be lower than in Q3, they added.

Treatment charges for copper concentrates have been rising in 2022 as miners add new projects or expanded production globally.

Copper miners pay fees in the form of TCs/RCs to smelters for turning ore into refined metal and the agreed rate plays a critical role in determining the profitability on both sides. TC/RCs typically rise when supply of copper concentrate increases.

The Q4 floor price for TCs/RCs set by the China Smelters' Purchase Team or CSPT is higher than the $80/mt and 8 cents/lb agreed for both Q3 and Q2, and the $70/mt and 7 cents/lb agreed for Q1.

Platts assessed CIF China Clean Copper Concentrate TCs/RCs at $85.10/mt and 8.51 cents/lb, respectively, Sept. 26, S&P Global Commodity Insights data showed. China's spot copper concentrate TCs have remained above the key $70/mt level since March, the data showed.

Spot liquidity currently remains thin between traders and smelters, market sources said.

"Smelters were staying away from non-standard copper concentrates," a trader said, adding that even finding buyers for standard clean concentrate was challenging.

High copper concentrate TCs remain a key reason why smelters are encouraged to keep production elevated, sources said.

China's refined copper output was expected to rise in September as domestic smelters resumed production after both COVID-19 restrictions and power shortages were eased, sources said.