Chinese copper smelters expect processing fees to remain stable next year

According to the news, copper smelting company executives and traders said that although some mining companies cut production to reduce the supply of new ore, but driven by strong local demand in China, Chinese copper smelting companies to global mining companies for copper concentrate processing fees will remain stable in 2016. Benchmark prices were at 10-year highs in 2015, trading at $107 a ton and 10.7 cents a pound, respectively.

Processing and refining costs (TC/RC) for benchmark Chinese clean standard copper concentrate are expected to remain around $100 to $110 a tonne, or 10 to 11 cents a pound, next year, according to executives at three state-owned Chinese copper refiners and Asian traders. This estimate is broadly in line with the level of processing and refining costs for spot copper concentrates, which are currently reported at about $100-105 and 10-10.5 cents.

The processing and refining cost is paid by the seller of copper concentrate to the smelter to process the imported copper concentrate into refined copper and is deducted from the smelter's purchase price. As the supply of copper concentrate increases, so does demand for refining energy and processing costs, boosting smelters' profits but squeezing miners'.

Chinese smelters are expected to make their case to global miners such as Rio Tinto and BHP Billiton at the annual LME Week in London next week. Negotiations will begin in earnest in November.