Copper miners consider counterparty risks in selling through 2025 and beyond

Sources told Fastmarkets that traders have agreed to concentrate contracts with aggressive processing and refining charges (TC/RC) for 2025, 2026 and 2027.

Sources told Fastmarkets that they believe some market factors could change, which would reduce market stress or change traders’ margins, which could cause problems for them.

These factors include an increase in concentrate production, particularly if Cobre Panama, closed since the last quarter of 2023, reopens or if there is some reduction in smelters, or a more restricted copper carryover, which is currently extensive and stimulates the economy of traders.

Sources told Fastmarkets that miners are considering how best to prepare for a situation in which some traders face financial challenges in 2025.

“There is a lot of speculation and betting going on in the market at the moment,” a trading source said. “No one really knows what market fundamentals will look like in 2025, 2026 and 2027.”

The first trader source added that market dynamics could change drastically and move the spot TC level, which could cause problems for traders who had bought at significantly lower levels.

“The counterparty risk is huge,” said a mining source, “we are cautious in how we sell because of the counterparty risk.”

Counterparties receive better TCs for 2025 tonnage

Several sources noted that during a recent call for tenders, some counterparties were able to receive better TCs for 2025 tonnage based on their perceived reliability in a situation in which the market was going to turn.

For a call for tenders covering 2,025 tonnages, Fastmarkets heard TCs in a range close to $10 per ton between different counterparties.

“They told us they were taking into account the reliability of the bids,” a second trade source said of a miner for the aforementioned 2025 tender.

“They made it clear that they were not obliged to give the lowest bid,” a second miner said of the said tender.

“If you sell to a small trader at a very negative price and the market turns, that could be a problem,” added the second miner.

Several sources noted that larger, more diversified traders may face less market movement.

“For some traders, the changes are diluted,” the first miner said, noting their large portfolio size and diversified assets.

Sources told Fastmarkets, however, that the copper market is expected to remain tight for a long time, meaning that while traders are taking risks by buying for years to come, they are following market expectations.

Sources have raised concerns about why large mining companies have sold less tonnage, if any, for 2025. Some small and medium-sized mining companies have, however, sold much more aggressively from 2025 onwards.

Sources said the reason traders were taking such an aggressive stance was because they wanted to guarantee they would have tonnage for next year.

“Traders are taking risks to stay afloat next year, not in terms of TC level, but in terms of tonnage guarantee,” the top trader told Fastmarkets.

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