Metals & Mining Theme, Non-Ferrous
January 06, 2025
COMMODITIES 2025: China to turn up heat in copper processing even as global output lags
HIGHLIGHTS
Global supplies seen straining as Chinese smelters avoid output slowdown
China aims for boosting blending capacity
Global TCs/RCs to remain under pressure
This is part of the COMMODITIES 2025 series where our reporters bring to you key themes that will drive commodities markets in 2025.
China's copper smelting production and capacity to store imported blending copper concentrates at specialized customs zones are both set to rise in 2025, further hinting at strained global copper supplies that are already lagging due to elevated demand and supply disruptions.
China is the world's largest processor and consumer of copper, a key material considered essential for energy transition efforts.
Smelting lift output
China's copper smelting production is expected to keep growing in 2025, despite expectations of a tight supply of copper concentrates continuing, industry sources said.
Chinese smelters are seeking alternative methods to relieve the adverse impacts of tight copper concentrate supply, such as increasing consumption of secondary copper material and widening blending copper concentrates capacity.
Production of global copper mines would continue to rise in 2025, however, the growth rate would be lower than copper smelting production, industry sources said, highlighting the demand-supply mismatch.
Meanwhile, collective bargaining by mining union workers would be a "wild card," which might result in disruption in the production of mines, some sources said.
Reflecting the continuously tight copper concentrate market, Chilean miner Antofagasta and Chinese smelters settled the benchmark copper concentrate treatment and refining charges (TCs/RCs) for 2025 at $21.25/mt and 2.125 cents/lb, respectively, representing a decline of over 70% year over year.
As of Dec. 23, the China spot treatment charge stood at $1.40/mt, hitting the lowest level since Sept. 20 and reflecting historically low availability of copper concentrate, S&P Global Commodity Insights data showed.
But output may take a hit if profits remain under pressure for too long during 2025.
In view of the lower TCs/RCs in 2025, there is a possibility that the growth of copper smelting might be lower than expected if smelters cut their production gradually due to losses, especially those with less long-term contract coverage, sources said.
Commodity Insights analysts cut their global copper concentrate market deficit forecast to 848,000 mt in 2025 due to potentially lower output at some smelters in China.
Market participants are also closely tracking the development of the Cobre Panama mine and Freeport's export permit by the Indonesian government, which could impact the global copper concentrates supply.
Chinese refined copper production did not see massive cuts as expected in 2024, as secondary copper materials supplemented the supply, with the utilization ratio expected to keep rising in 2025.
Blending capacity on rise
China's capacity for blending copper concentrates in specialized customs areas, known as bonded areas, was set to increase significantly as the country advanced its pilot projects, industry sources said.
This development was expected to boost demand for complex copper concentrate, while simultaneously reducing reliance on imports from external blending plants, according to industry sources.
Bonded areas, designated by China's customs authorities, provided exclusive zones that allow for tax deferrals on imported goods. Storing goods in these areas enabled importers to defer tax payments, enhancing financial flexibility.
| Port | Capacity |
| Established project | |
| Lianyungang, Jiangsu | 15 |
| Yantai, Shandong | 60 |
| Qingdao, Shandong | 40 |
| Fangchenggang, Guangxi | 40 |
| Ningde, Fujian | 40-50 |
| Zhoushan, Zhejiang | 50-60 |
| Dalian, Liaoning | NA |
| Projects under construction | |
| Beihai, Guangxi | 50 |
| Alashankou, Xinjiang | NA |
| Tangshan, Hebei | NA |
| Dongfang, Hainan | 80 |
| Source: Government reports | |
| Unit in 10,000 mt/year |
China would prudently move forward with the implementation of copper concentrate blending pilots in bonded areas, in line with some measures introduced by the country's customs agency aimed at optimizing the business environment at ports and facilitating customs clearance for enterprises.
As the world's largest importer and consumer of copper, China has been facing challenges due to the declining quality of copper concentrates from overseas mines.
Current data indicated that only about 20% of copper concentrate produced globally through direct mining meets China's stringent import standards. Consequently, many traders resorted to blending copper concentrates of varying sources and qualities at overseas plants to comply with these standards, which has led to increased import costs and tightened supply, according to Dalian Customs.
China's customs authorities enforced strict regulations regarding impurity content in imported copper concentrates, particularly concerning arsenic, lead, fluorine, cadmium, and mercury.
By blending imported copper concentrates in bonded areas, domestic enterprises can tailor blends to meet specific standards, thereby promoting stability and ensuring a smooth supply chain within the country's copper industry.
This approach would not only shorten logistics times and reduce procurement costs but also significantly enhance economic benefits for Chinese enterprises, according to Dalian Customs.
China has been actively exploring the blending of imported copper concentrates at bonded areas over the past few years, after building blending facilities in Fangchenggang and Yantai in 2020, according to industry sources.
Chinese smelters are increasingly inclined to blend copper concentrates, as they typically hold long-term contracts for standard clean concentrates, which allows them to optimize freight and insurance costs.
Platts assessed CIF China Clean Copper Concentrates treatment and refining charges at minus $0.1/mt and minus 0.01 cents/lb, respectively, on Dec. 30, down from this year's high of $53/mt and 5.30 cents/lb on Jan. 2, Commodity Insights data showed.
Currently, global copper concentrates treatment and refining charges have been languishing due to tight supply.
Traders said that demand remained robust for shipments loading in the first quarter, as smelters anticipated maintaining high production rates during Q1. Several smelters surveyed by Commodity Insights said they currently have no plans to reduce production, indicating a growing gap between demand and supply.