Japan Cu Smelters Gain 70% Better TC/RC for 2009-10

Pan Pacific Copper (PPC), Japanese largest copper smelter jointly invested by Nippon Mining & Metals and Mitsui Mining & Smelting, and BHP Billiton agreed to increase the treatment and refining charge (TC/RC) by about 70% for 2009-10 copper ore shipment compared with 2008-09 shipment. Mitsubishi Materials agreed with Freeport-McMoRan Copper & Gold at the similar level last week. Japanese smelters are almost gaining 70% better TC/RC in the latest price negotiations from the previous year.

PPC and Mitsubishi Materials don’t disclose details of the latest price negotiations. At the previous-year negotiations for 2008-09 shipment, TC was set at US$ 45 per tonne and RC at 4.5 US cents per pound. By calculation, TC apparently improves to US$ 75 and RC to 7.5 US cents for 2009-10 shipment.

TC/RC improves for the first time since the mid-year negotiation for Jul05-Jun06 shipment, when TC was US$ 112.5 and RC was 11.25 US cents. TC/RC decreased during the recent three and a half years due to the ore demand expansion in emerging countries. Japanese smelters gained only TC of US$ 45 and RC of 4.5 US cents in the latest mid-year negotiation for Jul08-Jun09 shipment.

Japanese smelters can gain 19.3 US cents per pound as margin based on TC of US$ 75 and RC of 7.5 US cents with 30% grade and 96.5% recovery ores. When electrolytic copper price is 150 US cents per pound, the current level, Japanese smelters pay 130.7 US cents to ore suppliers as ore cost.