Copper
CSPT Raises Q1 2020 Buying Floor
February 2020
China uses half of the world's copper and the trade tariffs with the US have been weighing on the market. The US Treasury lifted China’s designation as a currency manipulator, which paved the way for the signing of a phase-one trade deal with China.

Inventories at international warehouses in New York, Shanghai and London – have shrunk by about 37% since July and is equivalent to 1.2% of global consumption. Chinese copper concentrate imports rocketed last year, January–November volumes reached 20.1Mt, just over 10% compared to the first 11 months of 2018 and already above the record in 2018. Therefore, it comes as no surprise as TCRCs responds to the market deficit of copper concentrate, smelters in China suspending operations or announcing production cuts and rumours of smelters unable to open letters of credit. It has been expected that a trade deal between the US and China would reveal the deficit in the market and see copper prices rise, which has so far, proven to be true.

The China Smelters Purchase Team (CSPT) set the TC/RC buying floor for Q1 2020 at US$67/t and 6.7c/lb in late December. This follows the US$62/t and 6.2c/lb set by Freeport McMoRan, Tongling Nonferrous Metals and several Chinese smelters in November.TC/RCs have been plummeting due to heavy smelter expansions in China and a tight global concentrate market. According to Reuters, two Chinese smelters from the CSPT have announced their intention to curb production as the low rates cut into smelter margins.

Ecuadoran state miner Enami EP and Codelco have progressed in their agreement over the Llurimagua copper- molybdenum deposit in Imbabura province, Ecuador. Once the agreement is signed the two companies can establish a public limited company in order to meet all necessary requirements. Enami will hold a 51% stake in the public limited company and Codelco will hold a 49% stake. Codelco will provide information on all exploration work and Enami will contribute to the concessions of permits and community areas. The public company will need a US$250m investment planned for the next four years, of which around 50% will be injected by 2021.