China’s copper smelters are facing a tightening supply of copper concentrate, leading some to cut output this year, with potential for more reductions in the coming year, according to industry participants and analysts.
The refined copper output from China, the world’s top producer, is under close scrutiny as investors anticipate long-term supply constraints due to increased demand for energy transition technologies. The closure of First Quantum’s Panama Cobre mine in December and other output cuts have exacerbated the raw material supply issues for smelters.
CRU, a research and consultancy firm, forecasts a global shortage of copper concentrate feed in 2025, estimating a deficit of 1.1 million metric tons. This shortfall could result in the closure of 300,000 tons of smelting capacity, a 640,000-ton decrease in demand as smelters reduce their utilization rates, and approximately 150,000 tons of delays in smelter projects.
While larger smelters that rely on yearly contract purchases have been less impacted—having secured treatment and refining charges (TC/RCs) agreements at $80 per ton and 8 cents per pound for this year’s supply—smaller producers are feeling the pressure to reduce production as spot TCs decline alongside concentrate supply.
In the first half of this year, several small and medium-sized smelters in China reduced production. Notably, Jinchuan cut output at two of its plants by 10% and 20% for one month each, while Baiyin reduced output at one smelter by 20-30% in March, as reported by CRU in June.
An official from a mid-sized smelter indicated that as supply shortages worsen, more smelters are likely to take action to cut output.