SMM: Copper concentrate spot processing fee is close to $0! How is the copper market evolving in the second and third quarters of centralized refinery maintenance? 【SMM Copper Summit】
At the 2024 (19th) SMM Copper Conference and Copper Industry Expo - Copper Raw Materials and Consumption Development Forum, jointly organized by Shanghai Nonferrous Metals Network (SMM) and Shandong Hengbang Smelting Co., Ltd., Wu Yifan, senior analyst of SMM Copper, shared the copper market in the context of copper raw material supply shortage.
China's copper concentrate supply
China's copper mines are facing challenges from production accidents, grade declines, production reductions, environmental protection policies and other factors, resulting in the threat of mine shutdowns and other factors, resulting in a year-on-year decline in China's copper concentrate since 2022, with a cumulative reduction of 24,900 metal tons from January to February 2024.
In the future, China's copper concentrate supply will increase
The increase of domestic copper concentrate is limited and mostly driven by expansion projects, and the super-large high-quality copper ore projects that can be developed and put into operation in China are very rare, and only the Hongnipo Copper Mine in Liangshan Prefecture of Chinalco Group and the Juno Copper Mine in Tibet of Zijin Mining can be seen, and the increase in the increment of domestic copper concentrate has encountered bottlenecks and the increasing import volume of copper concentrate has caused the self-sufficiency rate of China's copper concentrate to continue to decrease.
In the past three years, China's copper refining capacity has expanded rapidly
From 2023 to 2025, the average annualized growth rate of China's copper refining capacity is expected to be 10%, surpassing the 5% refining capacity growth rate from 2014 to 2022, and finally forming a pattern of 12.14 million tons of crude refining capacity, which will largely bring challenges to the raw material procurement of smelters.
The world's major copper concentrate increase is mainly due to expansion projects
In the future, the increase of global copper concentrate will mainly come from the existing copper mine expansion projects, and the number of new projects put into production of world-class copper mines is not only limited, but also the new production projects are difficult to drive the increase of copper concentrate.
The increase in global copper refining capacity is mainly due to greenfield projects
In the next two years, Asia's copper refining capacity will grow rapidly, and the new refining projects of China's various smelters are the most important engine for the growth of the world's copper refining capacity, and China's crude refining capacity will exceed 50% of the world's copper refining capacity in the future.
There is an imbalance between supply and demand of copper concentrate
After the implementation of the 2024 Benchmark, the Cobre Panama copper mine in Central America stopped production throughout the year, Anglo American lowered its copper production target for 2024 by 18-210,000 metal tons, Zambia reduced hydropower by 85%, and Brazil's Ministry of Environment shut down Vale's mines, and the supply side disruption was greater than expected a year ago.
Inventories of copper concentrate and copper anode are gradually increasing
Some copper smelters in China are about to enter the centralized maintenance period in the second and third quarters, and the inventory of copper concentrate and copper anode will increase under the expectation of a month-by-month decrease in electrolytic copper production, and the proportion of recycled copper raw materials flowing into the smelting end is increasing with the sharp rise in copper prices.
There is a shortage of copper at the end of the mine, and spot processing fees have plummeted
Overseas copper concentrate supply side production cuts and shutdowns have pressured Chinese smelters to purchase raw materials, copper concentrate sellers have narrowed the proportion of long orders signed, enlarged the proportion of spot transactions, spot processing fees have fallen again and again, and the spot processing fees of copper concentrate have approached $0.
The sanctions on Russian copper have increased the pressure on global electrolytic copper inventories
The global electrolytic copper inventory continues to accumulate, but the absolute value is still low, and the LME electrolytic copper inventory will face greater pressure when the Russian copper sanctions plan is implemented.
After the Spring Festival holiday in 2024, electrolytic copper consumption will recover rapidly
According to SMM's monthly survey of China's major copper consumption sectors, downstream copper consumption quickly returned to normal levels after the Spring Festival holiday, and consumption was better than expected.
Forecast for 2024 by terminal segment
In 2024, the consumption of electrolytic copper will mainly be driven by the new energy, photovoltaic and home appliance industries.
Copper prices hit all-time highs
The resonance of macro and fundamentals has pushed copper prices to new highs since 2006, and the current price has all the expected factors.
》2024SMM 19th Copper Conference & Copper Industry Expo Special Report