CRU’s Copper Concentrates Team operates out of offices across the globe, with representatives in Santiago, London, Singapore, Beijing and Sydney.
We follow everything from anode slimes to sulphuric acid prices, to construct our view on the wider copper concentrates market. Below, we pick out 10 key themes that will steer the market in 2020.
Elevated risk of further disruptions in South America
A series of strikes and protests have elevated the risk of further mine disruptions in 2020. The major stumbling blocks in Chile include the many (>10) labour contract negotiations, and the risk of civil unrest erupting around the constitutional referendum (26th April).
Water shortages will impact mines across the globe
Severe droughts and increased water demand from copper miners will impact costs and output in parts of South America, Africa and Australia. ESG matters remain a major concern for all copper miners.
Less complex concentrates on the custom market
An unusual sequence of events caused levels of complex material to spike last year. However, we expect levels to return to normal in 2020. That said, how we define complex concs could be affected by tighter import restrictions in China, that were floated and dropped last year.
Smelter closures in China as losses start to stack up
The wave of new smelter projects that have come online in China, over recent years, has pushed the concentrates market into deficits. Chinese smelters will compete for tonnes, but declining TCs, weak acid prices and premiums, as well as rising costs, will prompt closures.
CSPT will help to consolidate industry
CSPT will help to consolidate the Chinese smelting industry as the market tightens. The 10-member group is already vetting new members and may look to snap up distressed assets. The group will be more resilient as the market tightens with its coordinated strategy.
Concentrates market to tighten throughout year
Ultimately, the pace of smelting capacity closures will determine how tight the concentrates market becomes over the next 12 months. The number of closures has been limited so far, however recent developments in Shandong maybe a taste of things to come.
TCRCs expected to be more range bound in 2020
With the sharp revision of the annual benchmark, down to $62/6.2¢, the spot market should remain more range bound this year. The benchmark has pushed many smelters towards, or even past, their breakeven threshold; which removes the incentive for aggressive buying at sharper terms.
Chinese policies to overhaul scrap market
We expect Chinese import quotas for copper scrap to be cut, and a new scheme permitting imports of higher quality material to be implemented during Q2 2020. This may cause the market for No.1 & No.2 scrap in the RoW to tighten, as imports of higher quality scrap into China increases.
Blister market expected to remain tight
The blister market has tightened over the past year as production and trade have been affected by numerous disruptions. The annual benchmark for blister RCs was revised down to $128/t; and the market is expected to remain tight as both primary and secondary feed demand increases.
Acid prices will remain under pressure in China
Acid prices will remain depressed in China as weak downstream fertilizers demand, combined with low sulphur prices and growing involuntary acid production, keeps prices low. Chinese export prices are likely to remain in single digit FOBs, while inland prices are even worse.