Mysteel's clean copper concentrate spot treatment charge (TC) index stood at -$159.67/dmt as of July 31, down by $2.47/dmt week on week. Some traders indicated that TCs still have room to decline, with no clear signs of a short-term recovery. Smelters were under significant operational pressure and continued to rely primarily on by-product revenues to offset losses, while maintaining a cautious procurement approach. In the near term, spot TCs for imported copper concentrates are expected to remain at low levels with continued volatility.
Source: Mysteel
Spot transactions last week continued to be dominated by the index deduction pricing model, with deduction levels falling further. According to Mysteel's survey, a trader sold 10,000 tonnes of clean copper concentrate for September shipment at index minus $23/dmt, while another trader sold 10,000 tonnes of September-shipment clean copper concentrate to a smelter at index minus $20/dmt.
China's average 98% smelting sulfuric acid price stood at Yuan 1,748/tonne on July 31, falling from Yuan 1,776/tonne on July 24, but stayed at relatively elevated levels, continuing complementing copper smelters' losses due to excessively low TCs.
This week, regional divergence in China's sulfuric acid market is expected to persist, with overall prices likely to continue declining. Cost-side support will remain relatively strong, as sulfur prices are expected to fluctuate at high levels amid tight spot supply. Meanwhile, firm prices for pyrite and non-ferrous metal ores, including copper, lead, and zinc, continue to provide rigid cost support from the raw material side. However, current market attention is increasingly shifting toward supply and demand fundamentals. On the supply side, domestic sulfuric acid operating rates are expected to recover slightly this week, with facilities that completed maintenance gradually resuming production. Overall output is expected to increase week on week, although the pace of recovery will vary by region. Supply growth is likely to be more pronounced in Central and East China, while some areas in Inner Mongolia and Northwest China will remain relatively tight, suggesting that regional divergence will continue. On the demand side, market performance is expected to remain weak. Continued declines in sulfuric acid prices have weighed on market sentiment and reduced downstream purchasing enthusiasm, with buyers increasingly adopting a wait-and-see approach and maintaining essential purchases. The phosphate fertilizer sector will remain cautious, while demand from the chemical industry may show some differentiation and marginal improvement, though overall demand growth may remain limited.
Overall, with recovering supply, weak demand, and cautious market sentiment jointly pressuring the market, China's sulfuric acid prices are expected to maintain a downward trend this week.
Source: Mysteel
With supply gradually recovering, demand showing limited improvement, and market confidence remaining weak, sulfuric acid prices are likely to face further downward pressure in China, while the price spread between sulfur-based sulfuric acid and smelting acid is expected to continue widening. Sulfur-based acid producers continue to face persistently high sulfur costs, leading to sustained losses and proactive production cuts, with prices likely to remain elevated. In contrast, smelting acid, as a by-product of copper and other metal smelting, generates substantial margins and provides a vital profit supplement for smelters amid persistently low TC levels. However, with smelters that had previously undergone maintenance gradually resuming normal production, smelting acid supply has been recovering. Yet downstream demand remains insufficient, causing prices to decline more sharply than those of sulfur-based acid.
Overall, caution is warranted over sharp price declines later on, which could further reduce the profit supplementation for copper smelting and impact output.
Written by Mingyuan Wang, wangmingyuan@mysteel.com
