Platts proposes to launch daily copper concentrate CIF China assessments, including three major brands differentials

S&P Global Platts proposes to begin publishing new daily Clean Copper Concentrate spot price assessments on CIF China basis, effective Feb 1, 2021. The new assessments would include treatment and refining charges (TC/RC) as well as price differentials for three major brands. S&P Global Platts invites feedback on all parts of the below proposal by Jan 22, 2021.

Platts has observed an increased spot activity in the copper concentrate market and believes that the market now requires granular, transparent and objective pricing information.

The assessments would reflect spot market value of generic clean copper concentrate of any origin at 1630 Singapore time, expressed as TC/RC values and as an all-in value calculated using assessed TC/RCs as well as copper, gold and silver futures prices at 1630 Singapore time for the relevant months. The assessments would consider trade information reported to Platts and published throughout the day, including firm bids and offers, transactions and indications, as well as any other data deemed relevant to the assessment process. Full description of the Platts assessments methodology and data hierarchy can be found here: /content/dam/spglobal/ci/en/documents/platts/en/our-methodology/methodology-specifications/Platts-Assessments-Methodology-Guide.pdf.

PROPOSED Platts clean copper concentrate CIF china Specification:

UNIT PRICE: TC/RC US$ per mt and US Cents per pound

VOLUME: Minimum 5,000 mt

Payment Terms: Letter of credit

DELIVERY WINDOW: Delivery to Chinese ports 2-4 months forward

COPPER FUTURES Quotation Period: Delivery month + 2

Calculation and normalization:

Platts appreciates that quality specifications are an integral and important part of the value of each brand and cargo of copper concentrate. Platts proposes to monitor the specifications and value of all relevant brands of copper concentrate for pricing consistency on an ongoing basis. Beyond copper, gold and silver content, Platts assessment may take into account normalizations for any chemical or physical characteristics that have a meaningful impact on price, including but not limited to arsenic, fluorine, mercury, lead and zinc content. Where the market value for a particular brand of concentrate is found to be departing from its implied quality, Platts would prioritize observed brand values over any theoretical calculations based on quality specifications.

In order to bring further transparency and consistency to its assessment process, Platts proposes to use the below standard payables scale when normalizing for copper, gold and silver content. The proposed scale reflects the current most common standard applied for spot market imports into China. Pricing information reflecting different scales would be normalized to this standard. Additional premiums may be applied when normalizing for gold content above 5g/mt or silver above 200g/mt.

Platts may seek to normalize to a base standard any contract terms which may have meaningful impact on the TC value, including for example divergent quality assay results and moisture levels at discharge ports, and seeks feedback on how to best to manage this.

Delivery timing and Quotation period:

Platts has observed that spot cargoes for copper concentrates to China typically load 5 to 13 weeks forward from contract date, and use M+3 as the quotation period, where M stands for loading month. As the shipping time for copper concentrate cargoes from most world suppliers to China typically falls between 10-40 days, Platts is proposing for its assessment to reflect cargoes delivered to China 2 to 4 months forward, with M+2 as the standard quotation period (QP) applied, where M stands for delivery month.

For example between December 1-31, 2020, Platts assessment would reflect cargoes that arrive to China from February 2021 to April 2021. During this period, the middle of the delivery window would be March 2021, meaning that the standard QP month applied would be May 2021. When the assessment date rolls into the next month, so from January 1, the Platts assessments would start reflecting cargoes for the delivery in March, April and May, 2021, against June 2021 QP.

Trade information based on different QPs than the standard QP would be normalized to M+2 basis, where M stands for delivery month. The normalization would be done based on intermonth futures spreads.

Platts assessments also consider price variances due to delivery timing. Where a structure is observed in the physical spot market, cargo delivery timing difference will be normalized to the middle of the standard 2-4 months window.

BRANDS ASSESSMENTS:

Alongside its benchmark Clean Copper Concentrate assessment, Platts proposes to assess daily differentials for Los Pelambres, Los Bronces and Escondida. Specifications, overall production volume and spot liquidity, as well as general resonance in the market were factors in the selection of these headline brands. These assessments would help provide a comparative framework for Platts Clean Copper Concentrate assessment. The brand prices would be calculated according to typical specifications, in line with the payable scales proposed above, copper, gold and silver futures prices for respective QP.

Market participants are invited to send feedback to platts_asia_copper@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.