September 19, 2017 / 6:24 AM / a year ago

China's copper smelters push for higher Q4 treatment charges

BEIJING, Sept 19 (Reuters) - China's top copper smelters will seek to set a higher floor for treatment and refining charges (TC/RCs) for the fourth quarter of this year, traders and analysts said, ahead of upcoming talks on 2018 supply contracts with miners.

Representatives of the 10 companies on the China Smelters Purchase Team (CSPT) will gather in Shanghai on Thursday for their quarterly TC/RC meeting, two sources close to the group said.

Traders expect the team, which includes Jiangxi Copper Co , Jinchuan Group and Tongling Nonferrous Metals Group, to set its new benchmarks higher than the third-quarter TC floor of $86 per tonne and RC of 8.6 cents per pound.

A source close to the team put current spot TCs at $88 per tonne, adding that the CSPT determines its prices based on market discussions. The market was not tight at the moment, the source added.

Higher charges by the smelters would reflect increased supplies of copper concentrate. China's copper concentrate imports stood at 1.44 million tonnes in August, up from 1.4 million tonnes in July, according to customs data.

The CSPT "will try to push Q4 so that they have some power of negotiation for the 2018 benchmark," said a trader who sells copper concentrate to companies on the team. He forecast a fourth-quarter TC of $88 per tonne.

The annual benchmark, which was $92.50 per tonne for 2017, according to a second source close to CSPT, is usually settled during Asia Copper Week in Shanghai, when global miners and smelters converge on China's second city for key contract renegotiations. This year, the event runs from Nov. 28 to Dec. 1.

Miners, smelters and traders often use a combination of the annual benchmark, quarterly benchmarks and spot prices when agreeing TC/RCs.

A source with a major miner said he thought China's TC/RCs would fall in Q4, citing tightness due to smelter maintenance, including at Glencore Plc's Pasar copper smelter in the Philippines. A Pasar official in Manila confirmed planned maintenance from Sept. 12-26.

"$86 is where the spot market is thereabouts," the mining source said. "I'd bet on lower numbers going forward as there currently are two major Chinese smelters standing idle, which incidentally usually are very active in the spot market."

Chris Wu, a copper consultant at CRU in Beijing, noted that copper prices had risen substantially, offering better margins for miners. She expected the CSPT to raise its charges, noting that current spot TCs would support such a move.

Three-month copper on the London Metal Exchange closed up 0.2 percent on $6,538 per tonne on Monday, although prices have eased from a three-year-high of $6,970 per tonne seen on Sept. 4. (Reporting by Tom Daly; additional reporting by Josephine Mason in BEIJING and Enrico Dela Cruz in MANILA; Editing by Richard Pullin)

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