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Deal has traders betting on fall in spot copper TC/RCs

Keywords: Tags  copper concentrates, copper, TC/RCs, BHP Billiton, Antamina, Freeport-McMoRan Copper & Gold, Grasberg Mine, Mark Burton

LONDON — The latest spot copper concentrate sale from BHP Billiton Plc’s Antamina Mine in Peru suggests traders are positioning themselves for a tightening in treatment and refining charges (TC/RCs) over the next few months.

BHP has agreed to sell two 10,000-tonne parcels of the Peruvian material to a trade buyer at $60 to $64 per dry metric tonne/6 to 6.4 cents per pound for delivery through August and September, external sources said.

The tender was concluded early June 12, shortly before Phoenix-based Freeport-McMoRan Copper & Gold Inc. declared force majeure at its Grasberg Mine (, June 12), where production stopped following an accident that killed 28 people and injured 10.

The spot tender also followed soon after BHP’s conclusion of discussions to supply a Japanese smelter with concentrates through the second half of the year. That deal was at a TC/RC charge of $72 per dmt/7.2 cents per pound, with BHP conceding $2/0.2 cents over the terms reached at the start of the year, market sources said.

"BHP must be kicking themselves," one concentrates trader told AMM sister publication Metal Bulletin shortly after the Grasberg force majeure was announced, adding that the Antamina deal indicates that the market is already betting TC/RCs will tighten while Grasberg is out.

"That would suggest the market is already reacting to this, in the sense that someone seems to be willing to take a punt on a tighter market in August and September," he said.

The last time Grasberg halted operations in 2011, spot TC/RCs tumbled to about $20 per dmt/2 cents per pound, and in some cases traders even bid flat to the LME price to secure high-quality concentrates.

But today, with or without Grasberg, there is a lot more copper concentrate around, and providing it comes back online within the one- to three-month timeframe that most observers forecast, the effect on processing terms will be less dramatic.

A version of this article was first published by AMM sister publication Metal Bulletin.

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