Copper Smelters in China Call for Production Cuts Amid Supply Shortages, Higher Processing Costs
China's leading copper smelters have called for reductions in output as raw material shortages persist, sources familiar with the matter revealed on Tuesday. At a meeting of the China Smelters Purchase Team (CSPT) in Shanghai, participants urged cuts in production and extensions of maintenance periods, although no formal decision was reached.
China, which accounts for roughly 47% of global refined copper output, is grappling with tight copper concentrate supplies and falling profit margins. The situation worsened following the closure of First Quantum's Cobre mine in Panama last December, pushing global supply into deficit. Industry experts expect the supply-demand gap to increase in the coming years due to expansion efforts in China and other countries like India.
Despite previous calls for cuts, China's refined copper production remained strong, with output exceeding market expectations. National Bureau of Statistics data showed refined copper production grew 6.2% to 8.91 million tons in the first eight months of the year.
During the meeting, CSPT, which includes over 10 top copper smelters, also agreed on a slight increase in treatment and refining charges (TC/RCs) for the fourth quarter. The guidance prices were set at $35 per metric ton and 3.5 cents per pound, up from the third-quarter rates of $30 per ton and 3 cents per pound, which were at a nine-year low.
This modest increase comes as Chinese smelters prepare for annual benchmark negotiations with global miners, set to take place in London next week during the London Metal Exchange’s annual gathering. TC/RCs, paid by miners to smelters for processing copper concentrate, are a key revenue source for smelters and indicate the availability of copper concentrate. A higher charge suggests more supply.
One source attributed the slight rise in TC/RCs guidance to the temporary closure of Daye's copper plant, which is expected to last three months, thereby releasing additional copper concentrate into the market.
