BEIJING (Scrap Monster): The sudden increase in the processing charges indicates that, the copper miners believe that, after five years of deficit, the metal will at the last flip to surplus. The indication of increase in supply has also affected the value of copper, which is reported to be lowered by 12 percent this year.
The hike in processing charges, will most probably encourage the smelters to increase their production, which would decline the tightness of supply in China, and also other parts of the world, if the smelters outside China, also hike their production.
Jiangxi Copper Company, the top most copper company, based in China, and also other Chinese smelters have decided on agreeing to the terms of Freeport, regarding the treatment and refining charges, proposed by the company. The treatment and refining charge, proposed by the company is, 107 dollars per ton of copper concentrates, for the shipments arriving for the beginning of the year 2015.
The hike in the processing charge is high compared to the 92 dollars per ton of copper, reported in the year 2014, which was 31 percent higher compared to the shipments in the year of 2013. The processing charges, which would applied from the beginning of the year 2015 is applied only to clean as well as standard copper concentrates which is supplied to China.
Freeport copper mine, is noted to be the world’s second largest copper mine, and is located in Indonesia. The company declined to give any information regarding the hike in processing charges.
The copper miners pay the smelter treatment charges or the refining charges, in order to refine the concentrate metals which are provided by the miners. These charges are deducted by the smelters from their purchase price. When the supply of copper increases, the demand by the miners for smelters also increases, this in turn increases the refining charges. And that ends with higher profits for the smelters.
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