Copper heads for worst quarter since March 2020

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Copper prices slipped on Thursday and were set for their biggest quarterly percentage drop since March 2020, hit by worries about a potential recession following a series of interest rate hikes and a slowdown in demand due to lockdowns in top consumer China.

Three-month copper on the London Metal Exchange was down 0.4 percent at $8,371.50 a ton. The contract has fallen more than 19 percent so far this quarter.

The most-traded August copper contract in Shanghai was flat at 63,940 yuan ($9,555.69) a ton by the midday break.

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“The Chinese economy has slowed down as the major metal consuming country was under a lockdown and on the other hand, policy tightening around the world continues to weigh on the complex,” said Kunal Shah, head of research at Nirmal Bang Commodities.

“We may see some stimulus package by China and it’s going to support metals. However, we are not expecting very big bull run as the demand side is looking bleak to us.”

Meanwhile, China’s top copper smelters set their floor treatment and refining charges (TC/RCs) for copper concentrate in the third quarter of 2022 at $80 per ton and 8 cents per pound, two sources with knowledge of the matter said.

The rates were decided at a meeting of the China Smelters Purchase Team (CSPT) held online on Thursday, said the sources, who declined to be identified as the meeting was private.

The new prices are flat to the floor for charges for the second quarter of 2022, but up from $55 per ton and 5.5 cents per lb set for the third quarter of 2021.

The last time charges surpassed $80 per ton was three years ago in the first quarter of 2019, when the rate was $92 per ton.

TC/RCs are a key source of revenue for smelters and are paid by miners when they sell copper concentrate, or semi-processed ore, to be refined into metal.

The charges fall when concentrate supply is tight. They rise when supply is readily available, giving smelters more bargaining power to demand better terms. – Reuters

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