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Value-added segment to help copper smelters offset margin pressure-2018 China(Guangzhou)Int¡¯l Non-Ferrous Metal£¨Copper£©Exhibition
12/21/2017 Copper exhibition -non-ferrous metals expo |
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Copper producers face uneven playing field Metal shares under pressure; Nifty Metal index down 2% Hindustan Copper to quadruple mine capacity Hind Copper eyes higher credit limit for expansion Strong prospects for Hindalco
A sharp decline in income from the copper business due to lower treatment and refining charges (Tc/Rc) is a concern for India¡¯s primary base metals producers including Hindalco Industries and Vedanta, but their focus on value-added copper products and firm aluminium prices should help offset any potential income decline in the copper business.
Global copper smelters led by Jiangxi Copper Corporation and Guixi of China are negotiating with global miners for conversion charges ranging at $70-89 a tonne (Tc) and refining charges (Rc) of US cents 7.0-8.9 a pound (about 450 gm) for the calendar year (CY) 2018. These ranges of Tc/Rc works out to 3-24 per cent lower than $92 a tonne (Tc) and US cents 9.2 (Rc) global smelters realised in CY2017.
India¡¯s custom copper smelters including Hindalco and Vedanta procure concentrate from global miners on both long-term contract as well as on a spot basis and earn Tc/Rc from their business. Variations in Tc/Rc determine an increase or decline in the top line and bottom line of their copper smelter business. Currently, global smelters see $80-85 a tonne of Tc and US cents 8.5 a pound as Rc as profitable. Almost a similar profit benchmark works out for Indian smelters including Hindalco and Vedanta.
¡°Global smelters are yet to arrive at a final decision on Tc/Rc. Over the last few years, we have worked out hard to reduce our cost of copper production through improvement in plant efficiency and diversification towards value-added products so that we would be able to make up for the (any) decline in Tc/Rc. Our new copper rods plant is expected to start commercial production sometime in April next year. Despite that, reduction in Tc/Rc will certainly have an impact on margins of our business,¡± said P Ramnath, chief executive officer, Sterlite Industries (India), the copper division of Vedanta.
-2018 China(Guangzhou)Int¡¯l Non-Ferrous Metal£¨Copper£©Exhibition
-Non-Ferrous Metal exhibition, 2018
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