World Copper Concentrate Supply Gets Tighter

Copper concentrate supply is getting tighter under operation troubles in offshore copper mines. Concentrate purchase condition, which is smelters’ income for processing, decreased to US$ 80 per tonne for treatment charge and to 8 US cents per pound from US$ 140 of TC and 14 US cents of RC in the beginning of the year. Japanese copper smelters already concluded the contract with miners for 2006-2007 shipment. However, the tighter supply could impact on mid-year negotiation in June. World copper mining output increased by 2.8% to 14.91 million tonnes in 2005 from 2004, according to International Copper Study Group (ICSG). The output of primary smelters, which produces copper from concentrate, increased by 3.9% to 14.32 million tonnes. The concentrate was 590,000 tonnes of oversupply in copper after more than 700,000 tonnes of oversupply in 2004. Under the oversupply, TC and RC reached record US$ 112.50115 per tonne and 11.25-11.5 US cents per pound respectively at mid-year negotiation between Japanese copper smelters and offshore minters in 2005. TC and RC were still high at US$ 95 and 9.5 US cents respectively at negotiation to the early 2006 for 2006-2007 shipment. However, the purchase condition is expected to worsen at coming mid-year negotiation in June. Japanese smelters expect copper concentrate supply is 200,000-300,000 tonnes of shortage in the year. Miners could reduce concentrate output more than expected due to operation troubles. The supply troubles occurred in worldwide operations including prolonged strike at Caridad mine of Grupo Mexico, fatal accident and stricter supervision at Freeport McMoRan Copper & Gold, output reduction announcement by Batu Hijau mine and operation troubles at Collahuasi mine in past 4 months.