Copper concentrate TCs continued to decline last week, while transaction volumes fell week on week. With smelting margins under pressure, smelters showed little willingness to chase higher-priced cargoes and remained highly resistant to fixed TCs below -$200/dmt. However, some traders believed TCs still had further room to fall in the short term and therefore preferred to sell on an index-minus basis, with offers mainly centered around a $25/dmt deduction from the index.
Source: Mysteel
According to Mysteel's survey, a trader sold 10,000 tonnes of copper concentrate to a smelter at spot index minus $25/dmt, while another trader sold 10,000 tonnes at spot index minus $20/dmt.
China's average 98% smelting sulfuric acid price stood at Yuan 1,584/tonne on September 4, falling from Yuan 1,615/tonne on August 28, with the supplement to copper smelters' profits gradually weakening.
China's sulfuric acid prices are expected to continue declining this week. On the supply side, overall operating rates are expected to remain largely stable. Sulfur-based acid producers that previously reduced or halted production due to cost pressures have no plans to resume operations. However, as sulfuric acid from smelters is a by-product, producers still have some profit margin and limited incentive to cut production in the short term, keeping the market well supplied. On the demand side, the phosphate fertilizer and chemical sectors are expected to recover slightly, but high costs and market participants' preference to buy on rises rather than decreases will limit actual transaction volumes, providing insufficient support for prices. Cost support will diverge. Sulfur and pyrite prices have both retreated from previous highs, while smelting acid costs have remained relatively stable. Overall, ample supply, weak demand and limited cost support are weighing on the market, leaving sulfuric acid prices with few upward drivers in the short term.
Source: Mysteel
Recently, sulfuric acid prices have continued to decline amid weak demand and recovering supply, gradually reducing the contribution to copper smelters' profitability. Some smelters have already increased sulfuric acid output to secure profits. Moving forward, attention should be paid to the risk of a sharper decline in sulfuric acid prices, which could further weigh on copper smelters' profitability.
Written by Mingyuan Wang, wangmingyuan@mysteel.com
