Investors jumped back into copper on Thursday after reports that top consumer China is slashing import quotas of scrap metal, a bullish development first rumoured last year.
After pulling back over the first three trading days of the year, Comex copper bounced back to just below $3.30 a pound ($7,270 per tonne) in New York, up over 1% from Wednesday’s settlement. While gains were pared by early afternoon volumes were heavy, especially considering not all market participants have returned from year-end holidays, with more than 100,000 lots worth some $8.4 billion traded.
Metalbulletin reports that Beijing cut its quota for the first two batches of 2018 copper scrap imports to 136kt, down a whopping 94.3% compared to 2017. The market data provider said not only were far fewer refiners applying for licences, but those that did saw allocations drop more than 80% below last year’s levels.
Another indication of tight supply came earlier this week after China’s copper smelters lowered their treatment and refining charges (TC/RCs) in the first quarter of 2018 by 8.4%. The 10-member China Smelters Purchase Team (CSPT) set the minimum level for treatment fees at $87 per tonne. Earlier China’s Tongling Nonferrous Metals Group had agreed with number one listed copper producer Freeport-McMoRan to set the 2018 benchmark at $82.25 per tonne, an 11% drop from the 2017 benchmarks.
TC/RCs paid by mining companies to smelters to turn concentrate into metal are a good indication of conditions in the spot market.
Copper gained 30% in 2017 as it continues to recover from six-year lows struck early last year and expectations are for a positive if more modest performance next year. Measured from its multi-year lows struck at the beginning of 2016, copper has gained more than 70% in value.
Source: Mining.com
