Copper smelting industry reels from threat of | World Mining

Copper smelting industry reels from threat of – World Mining News

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The copper smelting industry is beneath growing strain as plants all over the world battle to compete with the scores of newer factories in China offering low cost manufacturing of the purple steel.

Commodity trader Glencore last week introduced a halt to operations at its Pasar smelter within the Philippines, citing “increasingly challenging market conditions” as charges that smelters charge to course of copper fell to an all-time low.

Global copper smelters are struggling to compete with rivals in China, which have quickly constructed out their fleet of the services and control about half of copper smelting capability worldwide, in keeping with RBC analysts.

Copper is needed for electric vehicles, batteries, energy cables and numerous different industrial elements which can be essential for the change to a internet zero financial system.

The industry can be going through uncertainty as a result of of the threat of tariffs after US President Donald Trump ordered a probe into copper imports.

The investigation into copper dumping might enable the administration to impose measures together with tariffs or quotas.

Traders warned that Pasar may be the primary of a sequence of smelters outdoors China that have been compelled to close down as a result of of depressed charges brought on by the capability oversupply.

Fees that smelters charge to show copper ore into the purple steel fell to an all-time low in late February and have been persistently damaging since December. It means smelters are in impact paying to course of the ore.

China’s Tongling Nonferrous Metals Group is reportedly planning to open two more copper smelters this 12 months that might worsen the oversupply.

Iván Arriagada, chief government of Chilean copper miner Antofagasta, informed the Financial Times in February that he anticipated circumstances to stay as they have been “for some time”. Some would “look at ways of reducing . . . the utilisation of their facilities”, he mentioned.

One trader mentioned robust circumstances have been prone to imply “more ex-China closures”, in an echo of what has occurred within the nickel market the place western firms have struggled to compete.

“Smelter margins are being squeezed,” mentioned Duncan Hobbs, an analyst at trader Concord Resources. “These are really tough times.”

“[Fees] are the lowest they’ve been in living memory,” added Albert Mackenzie from price reporting company Fastmarkets.

Although the record-low spot market charges have hit margins, many smelters get more of their revenues from long-term contracts for copper ore.

Those contracts are agreed round a benchmark price, which is predicted to be a little over $20 per tonne this 12 months in contrast with $80 last 12 months.

Smelters additionally make money from the byproducts of processing copper, which embrace sulphuric acid and different metals contained within the ore, corresponding to gold. Gold has soared to document highs this 12 months. 

In addition, many firms with smelters own copper mining or manufacturing operations, and need the ability, even when it doesn’t make money on a standalone foundation.

Analysts mentioned closing a smelter, which takes a long time to convey back online, could be a last resort. 

Given how long costs have remained low, if it was attainable for smelters to shortly shut down and recoup money, “they would have by now”, mentioned RBC Capital Markets analyst Ben Davis.

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