(Repeats story published earlier with no changes to text.)
* Nearly 3.5 mln T of capacity on maintenance in March -Citi
* Low fees could shrink refined copper supplies, underpin
* Traders redirecting copper shipments among Asian ports
By Melanie Burton
MELBOURNE, March 8 Spot processing fees in Asia
for copper concentrate have slid to their cheapest in four years
as shutdowns at the world's top two mines in Chile and Indonesia
grind on longer than anticipated, and it is likely they will
drop further in the coming month.
Treatment and refining charges (TC/RCs) for
trader-to-smelter deals for shipments to China in March and
April have fallen to around $70 a tonne and 7 cents a pound,
according to a smelter and a trading source.
That is the weakest since around April 2013, according to
metals and mining consultancy CRU, and a steep drop from 2017
term rates of $92.50 a tonne. Smelters typically cut fees to
compete for concentrate stocks when supplies are short.
Smelters with low stocks, including in top refined metal
maker China as well as India and Japan, are facing narrowing
margins as fees slide. Some in China have moved up maintenance
to wait out the shortfall, analysts and smelter sources say.
This is set to eat into 2017 refined copper output, pushing
the market into deficit as global manufacturing demand revives,
and is likely to drive a rally in prices.
"We're a bit stumped about why copper prices haven't shot up
and we haven't seen (TC/RCs) much sharper in the past week,"
said a trader at a global company in Asia.
"My take is they're shuffling the shipments around,
diverting some and bringing others forward, and so far there is
sufficient concentrate supply," the trader said.
Even at the four-year low for TC/RCs, smelters have some
room to move, consultancy CRU said, with the break even point
for Chinese smelters at $55 per tonne and for Japan at $45 a
tonne. It did not provide figures for other Asian regions.
Citi sees nearly 3.5 million tonnes of annual smelter
capacity potentially going into maintenance in March given the
tight concentrate market. That will "accelerate a tightening
metal market trend via falling copper inventory heading into
2Q-17," analyst David Wilson said in a report.
Citi expects the supply shock to help push refined copper
into a deficit in 2017 for the first time in six years, and
propel copper prices to nearly $7,000 a tonne before year-end,
up 20 percent from $5,800 on Wednesday.
INDIA AND JAPAN
Smelters in India and Japan are expected to be among the
first hit by the tighter supplies since they carry relatively
low inventories across their financial year-end on March 31 and
typically take shipments from the disrupted mines.
"The Indians are starting to feel a little uncomfortable,"
said one concentrate trader at a Swiss trading house in Asia.
A strike at the world's biggest copper mine - BHP Billiton's
Escondida in Chile - is entering its fourth
week and has shut concentrate output. Workers at Cerro Verde,
one of Peru's largest mines, are also set to start a strike on
In Indonesia, concentrate exports have been cut off since
January from Freeport-McMoRan's Grasberg site, the
world's second biggest copper mine.
Indian smelter Vedanta Resources said it did not
expect any "operational challenges ... (and had) taken all the
necessary steps to ensure no impact from this disruption,"
although provided no details.
India's other main smelter, Hindalco Industries,
did not respond to a request for comment.
Pan Pacific Copper, Japan's biggest copper smelter, is
making some adjustments such as on shipping to secure supplies,
a spokesman said.
Sumitomo Metal Mining said it had not yet been
affected by the disruptions from Escondida or Grasberg because
it also gets concentrate from other mines. It also did not
include the Indonesian mine in its procurement plans for this
year because of the potential for disruption.
"But if the strike continues at Escondida for a long time,
we may need to think of other measures," a spokeswoman said,
without giving further details.
(Reporting by Melanie Burton in MELBOURNE; Additional reporting
by Yuka Obayashi in TOKYO, Promit Mukherjee in MUMBAI, and Jane
Chung in SEOUL; Editing by Tom Hogue)