Leading Chinese copper smelters may discuss production plans at a quarterly meeting next week after plunging processing fees threatened to wipe out their profits in a major challenge for the industry.
Smelters including Jiangxi Copper Co. and Tongling Nonferrous Metals Group Co. will meet in Shanghai next Thursday, according to people with knowledge of the matter. The agenda includes the outlook for the concentrate market, and setting guidance for spot processing fees in the second quarter, said the people, who asked not to be named discussing a private matter. Attendees may also discuss output plans.
Smelters in China, the world’s largest refined copper producer and consumer, are at a critical juncture after so-called treatment and refining charges — the amount they are paid to convert concentrate into metal — collapsed. The plunge has been driven by a slew of supply setbacks at global mines, coupled with a relentless expansion in Chinese capacity that’s boosted competition.
The meetings convened by the Copper Smelters Purchasing Team are held each quarter for smelters to set so-called floor prices to guide them in their separate negotiations for concentrate supplies from miners. The upcoming one follows talks between companies and the government about possible production cuts and capacity controls, news of which helped to boost refined prices.
Read More: China’s copper smelters vow capacity controls after fees plunge
China’s refined copper production, which accounts for about half of the world’s total, has eased from the record levels posted toward the end of last year. Output was at 2.215 million tons in the first two months of 2024, or nearly 37,000 tons a day, lower than the 38,000 tons recorded in November. Still, that represents an 11% increase from a year ago.
Output may fall further in the second quarter as maintenance work peaks and some smelters bring forward their annual repairs, according to analysts.
Benchmark copper futures traded 0.6% lower at $8,925 a ton on the London Metal Exchange at 3:55 p.m. local time. Prices touched $9,164.50 earlier this week, the highest since April, with gains also supported by expectations that the US Federal Reserve will soon cut interest rates.
Representatives from Jiangxi Copper and Tongling Nonferrous declined to comment.
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