In a rare move, major Chinese copper smelters have agreed to lower operation rates, adjust maintenance schedules, and delay new projects in response to unexpected supply shortages of copper concentrate impacting their profit margins. The decision was reached during a meeting hosted by the China Nonferrous Metals Industry Association in Beijing, attended by 19 Chinese smelters. This collaborative effort aims to ensure the sustainable development of the global copper smelting industry.
The agreement comes following reports that top Chinese smelters had jointly decided to implement production cuts at certain unprofitable plants. The proactive measures taken by the smelters have already had a positive impact on market sentiment, with benchmark copper prices surging to multi-month highs on both the London Metal Exchange and the Shanghai Futures Exchange.
To address supply challenges, copper companies have committed to boosting the development of domestic and overseas copper mines, as well as increasing the utilization of domestic copper scrap raw materials. Additionally, the industry plans to set stricter criteria for new smelting projects and collaborate with government bodies to regulate capacity expansion.
Copper, a vital component in various industries such as power, transportation, and construction, is experiencing a surge in demand driven by the renewable energy sector. The coordinated efforts of Chinese copper smelters reflect a strategic approach to navigate supply chain disruptions and ensure the long-term sustainability of the copper smelting industry.