A survey of industry participants has found that copper concentrate processing fees, known as Treatment and Refining Charges (TC/RCs), are expected to be set at a 15-year low in 2025. This is due to the increasing tightness in raw material supply resulting from mine disruptions and an expansion in smelting capacity.
As copper sector participants gather for their annual Shanghai meeting next week, the focus will be on the negotiations between global miners and smelters in China, the world’s dominant processor, to determine the global benchmark for next year’s fees.
TC/RCs are a key source of revenue for smelters and are paid by miners when they sell concentrate (semi-processed ore) to be refined into metal. The charges typically fall when ore supply decreases and rise when more concentrate is available.
A Reuters poll of various industry sources including smelters, traders, miners, analysts, and consultants showed a wide range of expectations for the TC/RC benchmark. The forecasts ranged from the high teens to $50 a metric ton.
Among the 45 respondents, 21 forecast a range of high $20s to mid $30s a ton, while nine predicted a range in the high teens to mid $20s, and 12 expected a range of high $20s to $40. The remainder gave a wide range of $20 – $50 a ton. These forecasts are significantly below 2024’s $80 a ton benchmark. The last time annual benchmark TC/RCs were below $50 was in 2010, according to CRU data.
With more smelters coming online while concentrate supply is decreasing, TC/RC prices are expected to decline. Analysts at the consultancy Shanghai Metals Market (SMM) anticipate that the global copper concentrate deficit will widen to 822,000 tons in 2025 from this year’s 221,000 tons.
In China alone, smelting capacity will reach 16 million tons in 2025 and approach 17 million tons in 2027, up from 14.26 million tons at the end of last year, as stated by Ge Honglin, chairman of the China Nonferrous Metals Industry Association (CNIA) in late October.
“All these smelters will need concentrates, so they’re hitting the market at probably the worst time,” said analyst Edward Meir at broker Marex.
The drastic falls in TC/RCs along with the worsening concentrate shortage have eroded smelters’ margins, forcing some to start maintenance or postpone production at new plants. The weekly index of TC/RCs for the Chinese spot market published by Shanghai Metal Markets is at $10.45 a ton.
“According to our estimate, if the benchmark is set below $40, many smelters will suffer loss,” said Zhao Yongcheng, principal analyst at Benchmark Minerals Intelligence.
Recent accidents at smelters owned by China Daye Non-Ferrous Metals Mining and Freeport Indonesia could mean the release of some copper raw material to the market, giving smelters some leverage over negotiations, analysts said.
The wide range in expectations means that negotiations could extend into December.
“None of these smelters are going to accept numbers around $10 or below,” said Meir.
“But if you’re a miner and you see TC/RCs trading at around plus or minus $10, it’s very hard for you to pay big numbers next year… Miners would need to pay up to ensure that they have enough smelting capacity,” he added.
Smelters will also likely increase usage of scrap copper to replace concentrate feed, analysts said. Beijing has allowed imports of more recycled copper and established a new state-backed recycling company to help reduce reliance on primary raw materials.
“But this is only going to be a temporary solution. The growth in secondary projects outside of China is increasingly likely to constrain the volume of scrap that China can import in the next few years,” said analyst Jonathan Barnes at consultancy Project Blue.
Copper TC/RCs Benchmark in 2025 Projected to Hit 15-Year Low Amid Supply Tightness and Capacity Expansion