Rising Treatment Charges and Production Cuts Impact Metals Market in China

Metals – ample copper ore supply lifts treatment charges in China

Some major copper smelters in China have agreed to pay higher treatment charges for some term copper concentrate supplies from Antofagasta Plc for next year, Bloomberg reported. Treatment charges for 2024 were set at US$88/t for as much as half of concentrate term supplies for the companies, much higher than the US$76/t signed for similar contracts for this year. This is aligned with the higher spot treatment charges we have been seeing and suggests a looser concentrate market.

In zinc, the latest LME data shows that total on-warrant stocks reported outflows of 5,050 tonnes (the biggest daily outflow since 7 December) to 63,275 tonnes yesterday. Most of the decline came from warehouses in Singapore and Malaysia. Meanwhile, cancelled warrants for copper rose by 4,500 tonnes to 17,000 tonnes as of yesterday, the highest since the end of December.

Recent reports from Mysteel suggest that steel mills in Tangshan City, a steel-producing hub in China, will limit steel production in July amid worsening air quality. Eleven steel mills with the higher environmental protection performance rating in the region are required to cut their output by 30% during the period. Meanwhile, steel companies with a lower performance rating are expected to cut their production by 50% in July.