China’s copper output is poised to reach a new high this year, with production projected to rise by 4.9% to approximately 12.4 million tons in 2025. This would surpass the 3.1% growth recorded in 2024, according to a survey by Mysteel Global. However, this growth comes amid significant financial strain on smelters, as processing fees have plunged into negative territory, and the government is tightening scrutiny on new smelter projects.
Refined copper production is forecast to climb in line with the country’s expanding capacity, despite processing fees turning unprofitable. Smelting companies, which are paying over $20 per ton to process concentrate, face the worst margins in industry history. These companies had been able to charge nearly $90 per ton in August 2023, but with processing fees now deeply underwater, most smelters are struggling to break even. While term treatment charges remain positive, they still fall short of covering costs.
Despite these challenges, China’s copper consumption remains strong, driven largely by the growth in renewable energy, which has offset a slowdown in construction. Yet, the rising output is not necessarily a response to demand, but rather a result of state-owned enterprises prioritizing market share and local economic support, even at a loss. The global shortage of concentrate supply is exacerbating the competition within the sector.
To reduce their losses, many smelters are shifting strategies. These include increasing the use of scrap copper, purchasing ore with higher gold content, and reducing the copper concentration in their output. Additionally, more downtime is expected in the second quarter, with approximately 3.2 million tons of capacity likely to be idled for maintenance—up from 2.7 million tons in the same period last year.
The landscape for copper smelting is marked by tough economic realities, but the industry continues to expand, driven by both government support and the ongoing need to meet China’s growing copper demand.
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