BEIJING/HANOI - China's top copper smelters on Friday have proposed cuttingtheir output, three sources familiar with the matter said on Friday, as tight supplies of copper concentrate ore for processing have cause treatment charges to fall.

The China Smelters Purchase Team (CSPT), a group of the country's top copper smelters, held an online meeting on Friday to discuss how to deal with a sharp drop in spot copper concentrate treatment charges (TC), or the price they receive for smelting the ore concentrate into copper, the sources said.

The TC prices are set as a function of smelter capacity and tend to fall when there is less concentrate supply and more smelting capacity available.

Despite agreeing to a proposal to cut production, no specific plans on reducing output were concluded during the meeting, the sources said.

At the meeting on Friday, smelters also proposed a floor level for TCs at $50 per ton, the sources said.

"This appears to have been an emergency meeting in response to the tight concentrate market which is seeing terms now as low as the $20s for sales to smelters," said analyst Craig Lang at CRU Group.

"The CSPT account for around 76% of China's copper smelter output, so any coordinated response to cut production would be expected to take some of the heat out of the concentrates market in the near term," Lang added.

Spot TCs for imported copper concentrate into China fell to $27.94 per metric ton on Friday, a drop of 33% from last week, according to data from Shanghai Metals Market.

The benchmark TC this year was settled by global miners and Chinese smelters at $80 per ton, the first drop in three years.

Concentrate supplies have tightened because of disruptions, including the closure of First Quantum's FM.TO Cobre mine in Panama, and Anglo American AAL.L cutting production guidance, combined with a large smelting capacity expansion globally.

To secure supply Chinese smelters have had to accept the lower TCs.

The TCs have derailed from market fundamentals because some traders held off from selling stocks and exacerbated the tightness in the concentrate market, said two of the sources.