Copper concentrate processing fees are expected to be set at a 15-year-low in 2025 because of increasing tightness in raw material supply from mine disruptions and an expansion in smelting capacity, a survey of industry participants found.
As copper sector participants met for their annual Shanghai gathering next week, attention will be on negotiations between global miners and smelters in China, the world’s dominant processor, to set the global benchmark for next year’s fees.
Treatment and refining charges (TC/RCs), a key source of revenue for smelters, are paid by miners when they sell concentrate, or semi-processed ore, to be refined into metal.
The charges tend to fall when ore supply declines and rise when more concentrate is available.
A Reuters poll of industry sources including smelters, traders, miners, analysts and consultants showed a wide range of expectation for the TC/RC benchmark, from the high teens to $50 a metric ton.
Among the 45 respondents, 21 forecast a range of high $20s to mid $30s a ton, while nine predicted a range in the high teens to mid $20s, and 12 expected a range of high $20s to $40. The remainder gave a wide range of $20-$50 a ton.
The forecasts are well below 2024’s $80 a ton benchmark. The last time annual benchmarkTC/RCs were below $50 was in 2010, CRU data showed.
TC/RC prices should decline as moresmelters come online amid less concentrate supply.
Analysts at consultancy Shanghai Metals Market (SMM) expect the global copper concentrate deficit to widen to 822,000 tons in 2025 from this year’s 221,000 tons.
In China alone, smelting capacity will reach 16 million tons in 2025 and approach 17 million tons in 2027, from 14.26 million tons at the end of last year, Ge Honglin, chairman of the China Nonferrous Metals Industry Association (CNIA), told a conference in late October.
“All these smelters will need concentrates, so they’re hitting the market at probably the worst time,” said analyst Edward Meir at broker Marex.
Drastic falls in TC/RCs along with a worsening concentrate shortage have eroded smelters’ margins, forcing some to start maintenance or postpone production at new plants.
The weekly index of TC/RCs for the Chinese spot marketpublished by Shanghai Metal Markets is at $10.45 a ton.
“According to our estimate, if the benchmark is set below $40, many smelters will suffer loss,” said Zhao Yongcheng, principal analyst at Benchmark Minerals Intelligence.
Recent accidents at smelters owned by China Daye Non-Ferrous Metals Mining and Freeport Indonesia could mean the release of some copper raw material to the market, giving smelters some leverage over negotiations, analysts said.
A wide range in expectations means negotiations could extend into December.
“None of these smelters are going to accept numbers around $10 or below,” said Meir.
“But if you’re a miner and you see TC/RCs trading at around plus or minus $10, it’s very hard for you to pay big numbers next year… Miners would need to pay up to ensure that they have enough smelting capacity,” he added.
Smelters will also likely increase usage of scrap copper to replace concentrate feed, analysts said.
Beijing has allowed imports of more recycled copper and established a new state-backed recycling company to help reduce reliance on primary raw materials.
“But this is only going to be a temporary solution. The growth in secondary projects outside of China is increasingly likely to constrain the volume of scrap that China can import in the next few years,” said analyst Jonathan Barnes at consultancy Project Blue.
Source: Reuters (Reporting by Amy Lv in Beijing, Mai Nguyen in Hanoi and Julian Luk in London; Editing by Christian Schmollinger)
