Matters:
Copper and zinc concentrate processing fees rose significantly: 1) on March 30, China copper raw material negotiation group cspt held an online meeting and finalized the spot TC guidance price of copper concentrate in the second quarter of 2022 as $80 / dry ton, an increase of $10 / ton compared with the first quarter. 2) According to SMM, Tektronix resources has signed an annual zinc concentrate contract, with a processing fee of $230 / dry ton, up 44.7% from $159 / dry ton in 2021.
Guoxin nonferrous metals viewpoint: 1) the processing fee of copper and zinc concentrate reflects the relationship between supply and demand of ore. The increase of concentrate processing fee does not necessarily mean that the concentrate supply is greatly relaxed. This round of increase of concentrate processing fee more reflects the relative shortage of smelting capacity. 2) Copper: last year, China's copper smelters made a big noise, and the output showed a downward trend after April. Since this year, China's smelting end has been constantly disturbed. A large private copper smelter in Shandong has stopped production due to debt problems, and a copper smelter in Northeast China has reduced production due to the epidemic, resulting in a slight inclination of the current market to buyers. 3) Zinc: there are two main reasons for the rise of long-term single processing fee of imported zinc concentrate. One is that the surge in foreign energy prices puts pressure on European zinc smelters to reduce production, and the other is that the price ratio of zinc outside China is lower. 4) Investment suggestion: the profit at the smelting end has a high elasticity to the concentrate processing fee. The smelting link affected by low processing fee last year will benefit from the upward trend of concentrate processing fee this year, and the high price of sulfuric acid will also significantly increase the profit of smelting link. Relevant listed companies we cover: Yunnan Copper Co.Ltd(000878) , Yunnan Chihong Zinc & Germanium Co.Ltd(600497) . 5) Risk tip: the mine output is lower than expected or the expansion of smelting capacity leads to the decline of processing fee and the decline of sulfuric acid price.
