Copper concentrate treatment and refining charges (TC/RCs) paid by mining companies to smelters are expected to remain low throughout 2025 amid a tightening supply, says Fastmarkets.

In a new report released this week, Fastmarkets analyst Andrew Cole is forecasting an annual average spot TC of $10.7 per tonne for 2025, approaching $20 per tonne on a monthly average basis by the year’s end.

TC/RCs have already been in a freefall since last year due to the expansions of smelters and a shortage of concentrates. In April of 2024, Fastmarkets’ weekly copper concentrate TC/RC index tracking the midpoint between smelter and trader buying levels fell into negative territory for the first time.

This trend, according to industry experts, is expected to continue in 2025.

A Reuters poll of industry sources had shown forecasts that were much lower than the 2024 benchmark of $80/tonne. In fact, the last time the annual benchmark fell below $50/tonne was 2010, according to CRU data.

Chile’s state-run copper commission Cochilco previously stated that it projects supply to tighten by 3.4% this year, which would drive TC/RCs further down.

Volume adjustments

Copper smelters typically book most of their copper concentrate supplies under annual supply contracts with their suppliers at a fixed number.

In response to tumbling annual TC/RCs, copper smelters are expected to use a more diversified and flexible way in signing annual contracts for 2025 supplies, according to Fastmarkets.

“Some smelters are looking for ‘less’ volumes [of copper concentrates] at a fixed number for their 2025’s annual contracts, while are asking for ‘more’ annual volumes priced against the spot index, and total supplies under long-term contracts are largely stable [from 2024’s],” one supplier source told Fastmarkets.

“Some traders quoted their offers of TC/RCs for 2025’s supplies at low $10s [per tonne], which is not a level we can accept. It seems we’re at something of an impasse and are now discussing with one supplier about linking some supplies to the spot index, rather than a fixed number,” a buyer source said.

Shift to intermediate materials

Amid persistent supply tightness, Chinese copper smelters have been encouraged to use more intermediate products, including blister copper and anodes, and copper scrap for their copper production, Fastmarkets also said.

These copper smelters increased the use of copper scrap and intermediate products during June-August following abundant supplies and decent prices of these materials, sources told Fastmarkets.

However, doubt remains among market participants over production support for copper smelters in 2025 due to market uncertainties over supply increase of copper scrap and intermediate products, they added.

“The [Chinese] government has encouraged more use of secondary materials, but it’s not that easy. Taking copper scrap for example, its supply is very sensitive to copper prices, with supplies growing when copper prices rise and falling and even disappearing when copper prices are not good,” a Ningbo-based copper scrap trader said.

Also, any potential policy change could also impact market sentiment, with fears of tariff hikes between China and the US already keeping Chinese importers away from US-origin scrap imports, sources said.

Byproducts to matter more

Faced with fierce competition in raw material markets and a gloomy demand for refined copper, copper smelters will become more sensitive and vulnerable to profitability of byproducts, like sulfuric acid and recovered metals, including gold, silver and other minor metals, Fastmarkets said.

Sulfuric acid, a byproduct of the copper smelting process, is a main income source for copper smelters, and strong sulfuric acid prices for much of 2024 helped provide some breathing room for Chinese copper smelters while spot copper concentrates TC/RCs collapsed.

However, the report said it remains unknown whether the sulfuric acid market will remain a supporter in 2025.

Source: MINING.COM – Read More