Xiangguang Copper to resume production under trusteeship of China's Xiamen C&D

Yanggu C&D Copper Co. Ltd, a subsidiary of Xiamen C&D Group, has signed a trusteeship agreement with Xiangguang Copper, a statement by Xiamen C&D to the Shanghai Stock Exchange April 28 showed.

The trusteeship will allow Xiamen C&D to learn about the production and operation of a copper smelter as well as to promote and update the copper industry of its supply chain business, the company said.

Yanggu C&D will use Xiangguang Copper's production site, equipment and manpower but it will purchase its own raw and supplementary material and be responsible for the maintenance, outsourcing and logistics services. Yanggu C&D will own the finished and by-products as well as take full responsibility for the company's bottom line.

Xiangguang Copper, with an annual production capacity of 500,000 mt, suspended its smelting plant in March due to a liquidity crisis. It was inclined to bring in a trustee to provide raw materials and capital; to help the company restore its production as quickly as possible, according to the statement.

Market sources said Xiangguang Copper would resume production at the end of May, however, both Xiamen C&D and Xiangguang Copper have yet to respond to S&P Global Commodity Insights' enquiries on the matter.

Yanggu C&D would sign term contracts with suppliers for the second-half of the year, but it will still need to source for prompt loading cargoes to prepare for the early stages of production, market sources said.

Market sources expected the company to restock 10-15 spot shipments loading over May to July.

Market sentiment for short-term treatment and refining charges turned positive this week as prompt demand was picking up quickly.

"We would only consider selling at low-$80s/mt in the current market," a trader said. Several offers in the mid-$80s/mt have already pulled away.

In addition, many smelters will restart their plants after maintenance in June, and spot demand is likely to pick up for Q3.

"Spot TCs have lost momentum to continue to go up," a smelter source said.

Spot TCs rose rapidly over March-April after Xiangguang Copper halted production and many distressed cargoes were offered in the spot market, market sources said.

The Platts CIF China clean copper concentrates treatment and refining charges have risen 29% since March 1, and was last assessed at $84.10/mt and 8.41 cents/lb, respectively, on April 27, data by S&P Global showed.