Metal Products News
- Smelters, BHP agree on copper fees
Date: 2-Aug-2007 Sources: (Shenzhen Daily)
DOMESTIC copper smelters have settled mid-year contract fees for processing raw material into refined copper with BHP Billiton Ltd. and other overseas miners, Beijing-based Antaike Information Development Co. said yesterday.
The fees have been settled at almost US$60 for treating a metric ton of copper concentrate and 6 U.S. cents a pound for refining, Antaike said in a report, citing an unnamed source from the Chinese Copper Smelter Purchase Team, which represents the country's biggest smelters.
The so-called treatment and refining charges, which can determine the viability of some smelters, were higher than some analysts had expected, given shortages of concentrate and low spot, or cash market, fees. The contract charges are set in mid-year and calendar-year agreements.
'It's relatively easier to obtain higher fees at this time as many smelters' production projects won't start until later in the year,'' Bonnie Liu, an analyst at Macquarie Bank Ltd., said. She said she also understood mid-year fees were US$60 and U.S. 6 cents, even though fees on the spot market are US$25 and 2.5 U.S. cents.
The smelters which settled with BHP were not named by Antaike. The China Smelter Purchasing Team includes Tongling Nonferrous Metal Co., Jiangxi Copper Co., Yunnan Copper Industry Co., Jinchuan Group Ltd., Daye Nonferrous Metal Co., Zhongtiaoshan Nonferrous Co., Baiyin Nonferrous Metal Co. and Yantai Penghui Copper Co.
Tongling Nonferrous Metal Co. officials dealing with the treatment and refining charge negotiations could not immediately be reached for comment. Tongling is China's largest copper smelter.
BHP Billiton, the world's biggest mining company, doesn't comment on individual deals, Melbourne-based BHP spokeswoman Samantha Evans said.
Calendar-year fees may be considerably lower than the mid-year settlements as growth in demand is expected to accelerate later in the year, Macquarie's Liu said.
The mid-year agreement for US$60 a ton and 6 U.S. cents a pound would be similar to terms agreed for calendar 2007. Jinrui Futures Co.'s Huang Shoufeng said July 6 that Chinese smelters couldn't have received more than US$50 and 5 U.S. cents.
About half of China's concentrate imports come from the spot market, with fees for the rest agreed in calendar-year or mid-year negotiations, Macquarie said in a research note June 13.
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