Top Chinese copper smelters will cut production in the second half of this year if the fees they receive to process spot imported concentrate do not meet their requirements, smelter officials said on Wednesday.
China is the world's biggest consumer of copper but produces only a third of its concentrate, the main raw material for copper. Production of refined copper could fall by at least 100,000 tonnes in the second half if the fees were not adequate, said Yang Jun, who leads the China Smelters Purchase Team, which is made up of the country's eight largest copper smelters.
A drop in Chinese production could raise the country's demand for imported metal and help support world copper prices which have risen more than 60 percent this year.
The country's eight largest copper smelters buy about 80 percent of China's imported concentrate to jointly import spot concentrate. The team was seeking $100 a tonne for treating and 10 cents a pound for refining spot imported concentrate, Yang said.
That would represent a 30 percent rise over fees currently offered by foreign suppliers and a 10 percent increase compared with many smelters' costs of about $90 a tonne for treating imported concentrate.
The fees are an important source of revenue for smelters such as Jiangxi Copper Co Ltd, China's largest copper producer and the second-largest, Tongling Non-ferrous Metals (Group) Co, where Yang is a trade manager.
He said the smelters did not expect to be able to import spot concentrate in the next month or two as that required fees. Industry officials and traders said the higher required fees had been proposed by the Ministry of Commerce.
Starting on June 20, the ministry would not issue permits to smelters that had agreed to receive fees lower than $100 a tonne and 10 cents a pound for processing spot imported concentrate, the officials said.
Comments
Comments are closed.