![]() Multiple workers’ unions contract negotiations are expected to be taking place during this year with probability of potential strike actions in South America. Though, there is an expectation of recovery in global mine supply in the second half of 2021 and with that also an increase in spot Treatment Charges, supply disruptions are still possible. The tightness in the copper concentrate market is anticipated to persist in the first half of the year at least, putting the pressure on smelters. In early March, according to Fastmarkets, the average spot treatment charge for clean concentrate fell to 38 USD per ton, signaling no improvement in supply conditions since November 2020 when the annual benchmark charges for 2021 were set. In the early months of 2021, spot Treatment and Refining charges for copper have continued to decline and are at their lowest level since 2012. This is a strong indication of the concentrate market tightness. The annual copper smelter benchmark Treatment Charges fell to the lowest level since 2012 to 59.5 USD per ton for year 2021. Falling TCs are putting pressure on companies relying on external concentrate supplies. Treatment and Refining Charges (TC/RCs) are the fees paid to smelters by mines for converting copper concentrate to copper cathode and key revenue source for smelters. Thirdly, although there is no evidence of an impact on mine operations from COVID-19 related restrictions in South America, this could remain a restraining factor on the pace of production ramp-up.Īlthough supply tightness was supportive for copper prices, smelters profits at the same time were put under pressure. Secondly, strike action in Peru at the Las Bambas mine led MMG to halting operations in November 2020 to mid-January, Glencore suspended operations at Antapaccay in Peru because members of the local community blockaded the copper mine, and workers at Antofagasta’s Los Pelambres were involved in mediation process with the company. Firstly, Latin American mine supply has been restrained by weather-related logistical challenges in Chile affecting port operations in January. ![]() Export declines could be an indication of weak trend in production in the end of 2020 and other disruptions. Overall mined production in 2020 decreased by 4%, according to S&P Global.Īccording to Goldman Sachs, the latest export data in 2021 from Chile and Peru showed sharp year on year declines in overall cathode exports and particularly to exports to China. ![]() Flows of metals concentrates from South American producer nations (such as Chile and Peru) have been disrupted by COVID restrictions. One of the copper price drivers during 2020 was the supply disruptions.
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