The recent economic tension between China and Australia has led to the former unofficially banning imports of copper concentrate from the latter, which may lead to market injury for Chinese smelters.
According to media reports, the Asian nation has now started closely inspecting Australian imports of copper concentrate, in a move that is similar to the ones that led to bans and tariffs on other Australian commodities such as seafood, barley, timber, and beef over the past few months.
As copper imports begin to decline, reports indicated that copper smelters in China will need to lower their smelting/refining charges to attract miners from other countries to ship material to them.
Refining charges (RC) have already fallen to $50.50/mt from the $62/mt benchmark for 2020. Market participants believe that the RC benchmark could fall to the mid-fifties in Q1 2021 if the situation persists, leading to lower margins for smelters.