It was a busy week for copper players while the ‘2019 Asian Copper Week’ was held in Shanghai. A wide range of topics were discussed, including the industry dynamics of demand, TC/RC, and raw material supply change. Roskill attended the IWCC/SHFE China Seminar which concentrated mainly on the copper demand side. Presentations were given on China macroeconomic forecasts, ACR tube demand, and new applications in 5G networks which is currently quite an attractive topic within the Chinese market.
Roskill feels that the overall sentiment is still slightly bullish for 2020, although Chinese GDP growth will face a slowdown in the coming years. US-China conflict has no doubt impacted this year’s copper demand and price, but analysts believe a preliminary agreement could be achieved by the end of this year, and could have a positive influence on commodity prices in 2020. Shanghai copper bonded stocks are rumoured to have dipped below 240kt in November, their lowest level for four years, according to local press reports.
The past few weeks have seen several interesting developments in the Chinese market. Freeport McMoRan and Jiangxi Copper settled contract terms for treatment and refining charges (TC/RC) of US$62/t and US¢6.2/lb for concentrate delivery in 2020, effectively setting the industry benchmark for next year. The terms are 23% lower than the TC/RC of US$80.8/t and US¢8.08/lb agreed in 2019. The main influences on the negotiations were the tight global copper concentrate market and the recent rapid growth in Chinese smelting capacity from new projects at Yunnan Copper Chifeng, Zijin Mining Heilongjiang, and Baiyin Non Ferrous. These plants contributed to a 17.9% year-on-year surge in Chinese refined copper production to 868kt in October, according to national statistics.
Meanwhile, secondary producers and fabricators are nervously awaiting some clarity on the likely level of scrap import quotas for category six materials in 2020. The first batch of quotas are due to be released before 31 December, but strong rumours are circulating that the volumes will be substantially down on 2019 and front-loaded into Q1 2020. The long-awaited reclassification of some grades of copper scrap as “renewable copper raw materials”, thereby making them no longer subject to quotas, is not expected until April 2020 and may not come into effect until 1 July.
Roskill released the first edition of its NEW report, Copper Demand to 2035, in August 2019. Click here to download the brochure and sample pages for the report, or access further information.