Chinese Copper Smelters Expand Production Cuts to Pressure Fee Negotiations
nashnova research
Several major Chinese copper smelters have begun cutting output and plan to extend reductions through 2027, squeezed between high concentrate costs and falling by-product prices; the cuts land just as next year's processing-fee negotiations begin, escalating a supply standoff.
Who is cutting, and by how much?
Tongling Nonferrous (铜陵有色) and Daye Nonferrous (大冶有色) have both confirmed cuts to concentrate processing volumes.
Tongling alone may see up to 30% of its primary smelting capacity affected; some plants are already in maintenance or running at minimum load.
This means → output is already shrinking, not just being discussed.
Why can't smelters hold on?
Concentrate costs remain elevated while sulphuric acid — smelting's main by-product — keeps dropping. The margin squeeze pushes smelters close to outright losses.
Tighter invoice regulations onshore have disrupted scrap-copper sales. In plain terms = smelters wanted cheaper scrap as a substitute for expensive concentrate, but that route is now blocked too.
COFCO Futures analyst Xu Wanqiu: "The market broadly expects smelters will have to continue cutting in the months ahead."
What does this mean for copper supply?
Mysteel Global estimates maintenance and cuts will remove 293,000 tonnes from Q4 refined output versus prior forecasts.
Full-year output is now expected to grow only about 1% to 13.7 million tonnes — down from nearly 15% growth last year, a sharp deceleration.
This reflects a second half so weak that it nearly erases the first half's expansion.
Is downstream already feeling the squeeze?
Large volumes of copper metal flowed to the U.S. earlier this year to front-run tariff expectations, draining Chinese inventories.
The Yangshan copper premium — the surcharge importers pay in Shanghai over London prices — has hit its highest level since records began in 2017.
Wang Wei, general manager of Shanghai Worrex Metals: "Supply is extremely tight. Fabricators' raw-material and finished-goods stocks have both fallen to rock bottom."
Real cuts or a bargaining tactic?
At this week's LME Week in London, production cuts dominated discussions among miners, traders, and buyers — with next year's concentrate treatment-charge negotiations about to begin.
Some concentrate sellers doubt all announced cuts will materialize: trimming purchases, temporary shutdowns, and threatening reductions are all well-worn negotiating tactics.
In plain terms = the smelters' margin pain is genuine, but the ultimate scale and duration of cuts will depend on how the bargaining plays out.
市场有风险，内容仅供研究参考，不构成投资建议。