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Andy Home: Copper smelters face both market and price crises
Copper smelters have become so desperate for raw materials that they pay miners to convert their concentrates into refined copper. The so-called treatment-and-refining-charges (TCRC) are supposed to be a major revenue source for copper smelters, but the spot charges have been in the negative since the beginning of the year. The copper bull narrative is that there are too few mines. However, the current collapse in processing fees can be attributed to too many smelters and too much demand. The imbalance is unsustainable, especially if the smelters accept to pay a negative amount for the mid-year discussions, which established the price for volumes much higher than those on the spot market. Copper industry pricing concentrations that are done annually or semi-annually is also unsustainable. ACID LIFELINE Smelters can rejoice that spot treatment costs have stopped dropping. Benchmark Mineral Intelligence reports that spot treatment charges have not done more than stabilize at $-45 a ton and -4.5 cents a pound. Smelters who chose to lock-in tonnages for the entire year are partially protected, but this year's benchmark term of $21.5 per tonne was also the lowest since at least 20 years. Mid-year negotiations are likely to produce a lower result, but smelters may balk at locking in a TCRC that is negative for contracts which could extend into 2026. The smelters are able to survive financially by producing valuable by-products, such as silver and gold. Smelters also produce sulphuric acids, which are in high demand in China due to the phosphate fertiliser industry. Copper should be the main source of revenue for a copper smelter, but that is not what we are seeing. Too Many Smelters The mines are not denying that production has increased. According to the International Copper Study Group, global output increased by 2.1% in 2020, 2.8% by 2024, and another 1.2% by the first quarter this year. China's copper concentrate imports are on the rise. They reached a record 28.2 millions tons of bulk weight in 2018 and grew 7.5% from year to year during the first four month of 2025. The problem is that Chinese smelting capacities have been brought online too quickly, and newcomers are chasing the available tonnage. The scrap is an alternative source of feed for some, but the market is becoming more competitive and Chinese imports are flat this year compared to 2024. In China's refined metal production, the rapid expansion of processing capacity can be seen. According to the National Bureau of Statistics, May's output increased by 14% compared to last year. Shanghai Metal Market, a local data provider, estimates that production has increased by 11% this year compared to 2024. Several Western smelters are already closing due to the squeeze on margins. In February, Glencore put its Pasar smelter located in the Philippines into care and maintenance. Sinomine has done the same at its Tsumeb facility in Namibia. Chinese operators appear to be intensifying their efforts in what is a strategy of the last man standing. BREAKING POINT China's increased smelting capability will not allow the world's mines to increase their collective output to the same extent. The raw materials supply chain will only get more stressed as new smelters are built in Indonesia. This will end the country's position as a major supplier of concentrates to Asian smelters. It is inevitable that something will give, especially since the Chinese copper market demand is expected cool down due to the reduction of subsidies in the solar panel industry. It could be some time before more capacity is closed to correct the current imbalance between supply and demand. This puts more pressure on the price-discovery process in the industry, which is still based on annual deals. In China, there has been a move towards quarterly and spot pricing. Smelters have learned that a negative annual price can be a serious problem. A mid-year negative deal is a bad precedent. Iron ore markets, for example, have shifted away from annual benchmarks that could not capture price volatility on the spot or sudden changes in supply dynamics. CME contracts are now available for the hedge of lithium, a commodity that is widely perceived to be too unique to trade on standardised futures. Copper smelters may need to rethink their pricing strategy in the processing chain. They are literally handing money to miners. The author is a columnist at
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Pakistan signs $4.5 Billion Loans with Local Banks to Reduce Power Sector Debt
Officials from the Pakistani government announced on Friday that 18 commercial banks had signed term sheets for an Islamic finance facility worth 1.275 trillion Pakistani Rupees ($4.50 billion), to help reduce debts in the power sector. The government, who owns or controls most of the infrastructure for power, is struggling with a ballooning "circular" debt, unpaid bills, and subsidies that have weighed down the sector and the economy. The liquidity crunch disrupted the supply, discouraged investments and increased fiscal pressure. It is therefore a major focus of Pakistan's IMF program worth $7 billion. Finding money to fill the gap is a constant challenge. Limited fiscal space, as well as high-cost debt from legacy obligations make it more difficult. Khurram Schéhzad, advisor to the finance ministry, said that 18 commercial banks would provide loans using Islamic financing. The IMF has agreed to a formula that secures the facility at a rate below the 3-month KIBOR benchmark rate, which banks use when pricing loans. Awais leghari, the Power Minister, said that it will be paid back in 24 quarterly installments over a period of six years and won't add to the public debt. Existing liabilities are subject to higher costs. These include late payment surcharges for Independent Power Producers up to KIBOR + 4.5% and older loans that range slightly above benchmark rates. Meezan Bank HBL National Bank of Pakistan UBL and UBL are among the banks that participated in the deal. The government will repay the loan with 323 billion rupees per year, which is capped at 1.938 Trillion rupees in six years. The agreement is also in line with Pakistan's goal of eliminating interest-based banks by 2028. Islamic finance accounts for about a quarter (25%) of the total banking assets.
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Oil plunges and stocks rise after Trump Middle East pause
The stock markets rose on Friday, while oil was headed for its largest daily drop since April as President Donald Trump delayed a decision about U.S. involvement in the Israel/Iran conflict. This week, the Middle East has again been a major factor in the top world indexes. The main European bourses all rose between 0.5%-1.4% after similar gains in Asia. However, it was still unclear whether this would be enough for MSCI to avoid a second consecutive weekly loss. Israel bombed Iranian targets and Iran fired missiles against Israel overnight, as the war that has been going on for a week continued. But Friday's market movements, which included a slight drop in the US dollar, revealed reassurance. The White House's announcement on Thursday that Trump would decide whether to get the U.S. involved in the war in two weeks, rather than immediately, was the main factor. The European Foreign Ministers met their Iranian counterparts in Geneva, Friday. They were seeking to return diplomacy on the disputed nuclear program. Oil prices have dropped to $76.10 a barrel due to the relief that the U.S. is not rushing into the conflict, but they are still up by 4% this week and 20% in the last month. Derek Halpenny, MUFG's strategist, said: "Brent crude has fallen 2.5% today as a clear sign that concerns over an imminent escalation of the Israel/Iran Conflict have eased." Gold, another safe-haven investment for traders, also fell on the day. Nasdaq, S&P500, and Dow futures all rose as Wall Street was preparing to resume after Thursday's closure. Asian shares gained 0.5% over night thanks to a 1.2% increase in Hong Kong's Hang Seng. The stimulus plans of newly elected president Lee Jae Myung also saw South Korea's Kospi surpass 3,000 points for first time since 2022. China's central banks kept its benchmark lending rates unchanged as was widely expected in Beijing. Meanwhile, data from Japan revealed that core inflation in Japan hit a 2-year high in may, putting pressure on the Bank of Japan. This in turn helped to lift the yen, and in Tokyo, the Nikkei stock market which is heavily export-oriented fell. OIL RETREATS The dollar ended a positive week with a slight decline, as the euro was up 0.3% versus the U.S. dollar at $1.1527. And the pound was 0.2% higher at £1.3494. The U.S. Bond market, which also was closed on Thursday, resumed its trading, with the 10-year Treasury yield at 4.39%. German 10-year yields, which are Europe's benchmark borrowing rate, dropped 2.5 basis points to 2.49 percent. Gold prices fell 0.8%, to $3,345 per ounce. This means that they will lose 2.5% on a weekly basis. The main focus of the commodity markets remained oil. Brent crude futures in London were down $2.45 or about 3% at $76.43 per barrel, but they are still on course to finish the week with a gain of almost 3%. PVM analyst John Evans stated that oil producers' nightmare scenario was Iran or its proxy could blockade the Strait of Hormuz. This has never occurred and 20 million barrels are shipped through this route each day. JPMorgan estimates this amounts to approximately 20% of global oil trade, and 30% of oil traded by sea. Francesco Arcangeli, of JPMorgan, wrote in a report that the market currently believes there is a low probability for this to happen. He estimated that oil prices could rise to $120-$130 per barrel if the Strait was completely closed.
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Teck Resources aims to boost output for metal-metal germanium chipmaking
Doug Brown, Teck Resources' VP of communications and government affairs, explained that the company is looking at options to increase production of germanium. This metal is crucial to chipmaking and Teck is in talks with various governments including Canada and United States about funding. Teck's plan is part of a growing effort to diversify the supply of minerals critical to the tech and defense sectors. Trade barriers and geopolitical tensions are making it difficult to access materials produced or refined mainly in China. He said, "We are looking at options and support from the market to increase production capacity of Germanium." China, which provides around 60% of all refined germanium in the world, has restricted its exports to the United States. This metal, along with antimony and gallium, have broad military applications. Trade tensions between two of the largest economies of the world are escalating after Washington cracked down on Beijing's chip industry. Export curbs are part of a larger effort that began in 2023 when China started imposing restrictions on vital mineral shipments citing national safety concerns. China wants to influence industries such as renewable energy, chip manufacturing, and defence by controlling the exports of these minerals. Germanium can also be found in solar cells, infrared and semiconductor technology. Brown stated that Teck is looking at ways to expand the existing processing line, using the technology already in place. Teck is the largest germanium producer in North America and fourth globally. Teck exports most of its germanium - a byproduct of its Red Dog operations, located in Alaska - to the United States via British Columbia, where it is melted and refined. The USMCA trade agreement (United States of America, Mexico and Canada) exempts Canadian exports of germanium to the United States from tariffs. Jonathan Wilkinson, Canada's Minister of Energy and Natural Resources, welcomed the United States in a speech he gave in Washington in January last year. He praised their partnership in investing in vital minerals including germanium. The Canadian Energy Ministry refused to comment on the funding of Teck. However, it did say that the Prime Minister is leading trade negotiations with the United States.
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Pakistan signs $4.5 Billion Loans with Local Banks to Reduce Power Sector Debt
The power minister announced on Friday that Pakistan had signed a term sheet with 18 commercial bankers for a 1,275 trillion rupees ($4.50 billion), Islamic finance facility, to help reduce the mounting debt in the country's power sector. The government, who owns or controls most of the infrastructure for power, is struggling with a ballooning "circular" debt, unpaid bills, and subsidies that have weighed down the sector and the economy. The liquidity crunch disrupted the supply, discouraged investments and increased fiscal pressure. It is therefore a major focus of Pakistan's IMF program worth $7 billion. Finding money to fill the gap is a constant challenge. Limited fiscal space and legacy debt with high costs make resolution efforts even more difficult. Awais leghari, the Power Minister, said that 18 commercial banks would provide these loans using Islamic financing. The loan will be paid back in 24 quarterly installments over a period of six years. The IMF has agreed to a formula that secures the facility at a rate below the 3-month KIBOR benchmark rate, which banks use when pricing loans. Leghari stated that it would not increase the public debt. Leghari said it will not add to public debt. He said that Meezan Bank was one of the participating banks, along with HBL, National Bank of Pakistan, and UBL. The government will repay the loan with 323 billion rupees per year, which is capped at 1.938 Trillion rupees in six years. The agreement is also in line with Pakistan's goal of eliminating interest-based banks by 2028. Islamic finance accounts for about a quarter (25%) of the total banking assets.
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Unions claim that Eni, Italy's oil company, is looking to create a new unit for managing refineries.
Two unions have said that Eni plans to create a new company in Italy focused on a number of assets, including oil refineries and fuel storage facilities. This was revealed after a meeting earlier this week with the state-controlled group. Unions claim that the new unit will probably be called Eni Industrial Evolution. It could include nearly 2,000 workers who are employed on the sites included. The FEMCA CISL trade union published a statement on its website Thursday stating that "EIE would take over management of traditional refinery, primary logistics, and the conversion of Livorno's and part of Sannazzaro's plants into bio-refineries." Eni has declined to comment about the news of the unions that was reported first by Italian newspaper Corriere della Sera. The state-controlled company has split some of its activities into satellites or separate entities and made deals with investors who are interested in the units. Eni is working on reducing its carbon footprint. It has set up the retail and renewable Plenitude unit, the biofuel company Enilive, and plans to launch a venture devoted to carbon storage and capture by the end this year. (Reporting and editing by Toby Chopra; Francesca Landini)
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ArcelorMittal abandons plans to produce green steel in Germany because of high energy costs
ArcelorMittal said that the energy costs in Germany were too high to allow it to convert its two German plants to carbon-neutral production. The German industrial sector is still suffering from the shock of losing the Russian gas which had been powering its factories for decades. This decision also calls into question the green hydrogen policy launched by the former government. The government hoped that the subsidies would encourage ArcelorMittal's existing plants in Bremen, in the north, and Eisenhuettenstadt, in the east, to use furnaces fueled with hydrogen. Hydrogen can be produced from renewable electricity. The steelmaker stated that it decided to not proceed with its plans due to the high energy prices in Germany and the uncertainty surrounding the future energy mix. The first electric arc smithies are being built by countries with competitive and predictable electricity supply, it stated. It highlighted a recent investment into a forge powered by electricity in France. It said that "electricity prices in Germany were high by international standards as well as compared to neighboring countries." The steel industry of Europe was also affected because so many consumers imported electricity instead of buying it from local producers. The German Economy Ministry regretted the decision of the company. The important thing to remember is that there has been no payment yet. In an email, a spokesperson for the ministry said that "no money needs to be reclaimed". Germany approved subsidies of 6.9 billion euro for steelmaking projects which further its climate objectives, including the amount for the now dropped Arcelor project. The ministry spokesperson confirmed that three other projects - from Thyssenkrupp, Salzgitter and Stahl-Holding-Saar - are still in progress. TKSE, Salzgitter and both companies said that they would continue to build green steel plants and called upon the government to improve market conditions for these projects. Germany is building rapidly renewable electricity networks. However, the transition away from Russian gas, which has been a long and painful process, has proved to be lengthy and costly, despite the generous subsidies offered to industries who rely on gas to switch over to hydrogen. The conservative-led coalition government, which took office in this year, has criticised the left-leaning previous government's strategy on energy but so far hasn't outlined a radical new approach. Geert van poelvoorde, ArcelorMittal Europe's head of Europe, said: "The European steel sector is under unprecedented pressure in order to maintain its competitiveness." "And this is before decarbonisation costs." He called on the European Commission (EC) to take action to limit imports of certain types of steel into Europe.
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Mercury poisoning in Peru’s Amazon region threatens health catastrophe
Loreto, Peru: Illegal gold mining pollutes the region Nearly 80 percent of the population has mercury levels that are unsafe Most at risk are pregnant women and children By Dan Collyns Test results revealed this month showed that nearly 80% (of those tested) had mercury levels far above the safe limit in six communities along the Nanay River and Pintuyacu River. Jairo Reategui davila, Apu or leader of San Antonio de Nanay - one of the communities tested - said that the majority of its population was contaminated. He said, "We are concerned and we want the authorities to act." Results showed that 37% of 273 men and women tested had mercury levels in their hair exceeding 10 ppm. This is compared to only 3% of those who were below the safe limit of 2.2 ppm set by the World Health Organization. Gold prices are up nearly 50% over the past year. This is a record-breaking increase, which has encouraged a flourishing gold mining industry that damages local biodiversity and nature, as well as raising serious health concerns. Claudia Vega is the head of CINCIA's mercury program. She said that illegal miners use toxic mercury to extract gold from river silt, and then burn it off. The vapour produced by the burning turns into a poisonous gas, which is absorbed in the soil, plants and rivers. Mercury poisoning can cause a variety of health problems, including cognitive impairment and learning disabilities in children and infants. Gabriel Barria is the regional coordinator of heavy metals at the local health authority. He said that it was "very unfortunate" that the villagers had been highly contaminated. He blamed mercury levels in Amazonian rivers on the illegal gold mining. He stated that the health authority didn't have the budget for tests to detect mercury. Only 12 people were tested during a recent visit by the health authority using blood and urine samples. EXCEEDING LIMIT CINCIA reported that tests showed an average level of 8.41 ppm. This is nearly four times higher than the WHO limit. There are currently no studies that have been conducted on the health effects of illegal mining on Loreto's local population. The levels found in these first tests are higher than the average levels of mercury in 2012 in Madre de Dios in Peruvian Amazon, the region most affected by illegal gold-mining. Luis Fernandez is the executive director of CINCIA, and a Research Professor at Wake Forest University. He said that if illegal mining in Loreto continued, then villages with high mercury levels could begin to move closer to those living near the worst case of mercury contamination. Minamata Bay is a case that was well-known in Japan during the 1950s. Children were born with neurological disabilities and congenital deformities as a result of a chemical plant dumping mercury in the water for years. Vega, the CINCIA researcher who conducted the study, stated that the results revealed "background" mercury levels in Loreto's riparian communities. She said that it was impossible to determine if the mercury in the water came from natural sources or from human activities such as illegal gold mining. However, she did say it was mainly caused by the villager's diet of fish. She said that "several scientific studies have shown that mining in a particular area tends to increase the mercury levels in the surrounding environment". According to the newly published study, people are mainly exposed methylmercury. This highly toxic form accumulates in our bodies.
Dalian iron ore is near flat this week due to China's resilient demand and property woes
The prices of Dalian Iron Ore Futures rose on Friday but remained nearly flat for the entire week, as investors balanced the resilient demand for steelmaking ingredients in China's top consumer against the persistent slump in that country's real estate market.
The most traded September iron ore contract at China's Dalian Commodity Exchange ended daytime trading 0.93% higher, at 703 Yuan ($97.85), a metric tonne. It also fell 0.07% in the past week.
As of 0708 GMT, the benchmark July iron ore traded on Singapore Exchange was 0.94% higher. It stood at $93.55 per ton.
This week, the contract was down 0.65%.
According to Mysteel, the operating rate of China's blast furnaces increased by 0.4% in the last week to 83.82%.
Mysteel data showed that hot metal production, which is a measure of iron ore consumption, increased 0.24% from week to week, reaching 2.422 millions tons as of 20th June.
Galaxy Futures, a broker, said: "While the demand is resilient right now, market traders are primarily focused on whether or not off-season demand continues to be factored into trading."
Construction in China peaks during the spring, before the rainy season begins.
Analysts at ANZ say that meaningful growth in steel and ore demand will not be possible until the new construction activity increases.
Official data released on Monday showed that China's new house prices dropped in May, continuing a stagnation of two years.
Goldman Sachs reported late Monday that the demand for new homes in China will likely remain below its 2017 peak during the next few decades.
Coking coal and coke, which are used to make steel, have both gained in the DCE. They rose by 1.08% apiece.
The Shanghai Futures Exchange saw a significant increase in the majority of steel benchmarks. Rebar was up by 0.23%. Hot-rolled coils were up by 0.39%. Wire rod rose around 0.3%. Stainless steel fell 0.44%. $1 = 7.1845 Chinese Yuan (Reporting and editing by Harikrishnan Nair, Sherry Jacob Phillips).
(source: Reuters)