From Reuters via Yahoo Finance, November 16:
(Repeats story with no changes to text)
- TC/RCs settlement this week looks unlikely - sources
- Indonesia and Panama supply uncertainty make forecast difficult
- Cobre Panama output loss minimal so far, but risk remains
Copper miners and smelters are unlikely to settle the annual treatment and refining charges (TC/RCs) for 2024 this week, amid uncertainty about the market balance next year, sources said.
"There are mixed views regarding the supply and demand outlook for next year, which leads to a divergence between buyers and sellers. We are not looking to settle this week," said a source at a major Chinese smelter.
Every year, global miners and Chinese smelters usually meet in Shanghai in November for the Asia Copper Week gathering to negotiate their copper concentrate contracts and settle TC/RCs level for the following year.
Miners pay TC/RCs to smelters to process copper concentrate into refined metal, offsetting the cost of the ore. TC/RCs fall when tight concentrate supplies undermine copper smelters' profit margins.
A settlement this week looks unlikely, four sources with knowledge of the negotiations told Reuters, though it is not rare for negotiations to drag on when miners and smelters cannot agree to a number.
A Reuters poll of 12 industry sources last week showed a wide range of forecast for TC, from the $70s to $90 a metric ton. However, most participants saw TC/RCs at around or slightly lower than $88 agreed last year for 2023.
Chilean miner Antofagasta this week offered to pay Chinese smelters TCs of less than $75 a metric ton in 2024, some 15% below the agreement made around the same time last year, sources told Reuters.
The drop signalled the miner's expectation of a supply deficit for 2024....
....MUCH MORE
Supply of both refined copper and concentrate are very tightly balanced and have been over the last year of so. This means futures on the metal have been driven by extrinsic factors, most importantly the strength or weakness of the dollar but also events like February's landslide at the immense Grasburg mine operated by the PT Freeport Indonesia joint venture.
Another type of extrinsic event is the unrest at the Cobre Panama operation of First Quantum. Earlier this year the Panamanian government brought operations to a standstill by using the port FM.tsx ships through as a bargaining chip. This latest imbroglio is the result of protests that may give political cover to the Supreme Court of Panama to pull the mining licenses. Additionally the port, Punta Rincón, is being blockaded.
When the earlier stoppages occurred we didn't get too concerned* as it is Panama's interest to keep the royalties coming. This time the situation is a bit riskier for First Quantum but one-way-or-another someone will mine the deposit. In the meantime taking 1% of global supply off the market may be enough to tip the supply/demand picture into a slight deficit.
Meanwhile the weakness of the dollar more than anything else is responsible for the up-move in the U.S. futures, from the October 23 low ($3.5195) to the current $3.6955:
*From July 6's "Freeport Indonesia awaits export permit as copper concentrate piles up" (FCX):
Earlier this year Panama wanted more money from First Quantum Minerals for production at their big mine and one of the levers they used was was shipping permits:
Panama gives First Quantum go-ahead to operate port terminal
And stuff was mined but not shipped with the threat that as storage space was filled mining would have to stop. But that was in no one's best interests so:
Copper Supply: "First Quantum resumes operations at Panama copper mine"
Our comment on this supply disruption a couple weeks ago:
We didn't relay much of the First Quantum/Panama saga, thinking that one way or another that deposit was going to get mined, Panama needs the revenue.
