Metal Minings News

The Chinese producer Tongling and BHPB came in of the settlement at $47.2/4.72¢. This was quickly followed by agreements with other major Chinese smelters, including Jiangxi Copper, Daye Nonferrous Metals and Tongling subsidiary, Jinlong Copper.

With these agreements now in place along with Sterlite’s at $45/4.5¢, the Japanese smelters have a tough task ahead if they are to agree higher terms. Following this week meetings with BHPB, the Japanese smelters will meet with Freeport in Tokyo during the next week. However, there are a number of arguments against these terms being adopted as the benchmark that the Japanese smelters can bring to the negotiating table. With the exception of the 2007 terms, the TC/RCs agreed in China and India and also elsewhere in Asia have typically been at a discount to those agreed with the Japanese and Korean smelters for a variety of reasons. These have included higher freight and port costs, less favourable payment terms and, for some Chinese buyers, difficulties in securing l/c. Terms in China have typically been around $5/0.5¢ below the Japanese benchmark, with terms in India somewhere in between the two.

In addition, this year Sterlite is reported to have agreed more favourable side terms and also an increase in tonnage, trading security of supply for more favourable terms. Therefore, these cannot be taken to be representative of the benchmark. Finally, the spot market has softened further over the last month and spot terms are now at or above the levels agreed by the Chinese in their long-term contracts.

This entry was posted on Wednesday, January 16th, 2008 at 12:05 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.