Copper supply cuts to aid miners as 2016 fee talks kick off

viernes 13 de noviembre de 2015 02:00 GYT

* Mine supply cuts to persist as low prices drag into 2016-miner

* CRU expects copper prices to average below $5000 next year

* Copper market seen in deficit this year, balanced next year - CRU

By Melanie Burton

MELBOURNE, Nov 13 (Reuters) - A rash of production cuts by copper miners will strengthen their hand next week when talks with China's powerful smelting industry on 2016 processing fees kick off in earnest in Shanghai.

The stage is set for a bitter contest between global miners such as Chile's Codelco and smelters such as Jiangxi Copper over the fees that miners pay smelters to turn ore into metal, with copper prices near six-year lows amid waning Chinese demand growth.

Treatment and refining charges (TC/RCs) are paid by miners to smelters to convert concentrate into refined metal and are deducted from the smelters' purchase prices. As the supply of concentrate rises, both demand for smelting capacity and the charges increase, boosting profits for smelters but cutting earnings for miners.

Miners lost out this year after 2015 benchmark TC/RCs soared to the highest in a decade on bets that a boom-time driven supply flood would swing the market into a chunky surplus for the first time in half a decade.

But a year later, that surplus has failed to appear due to a bevy of price-driven production cuts and bad weather that curbed output. Miners have won much better terms for material sold on the spot market.   Continuación...