Chinese Copper Smelters Forego Guidance Amid Severe Concentrate Shortage

China's leading copper smelters have opted not to set treatment and refining charges (TC/RCs) guidance for the second quarter, signaling deepening concerns over a severe shortage of copper concentrate. This decision, made during a China Smelters Purchase Team (CSPT) meeting in Shanghai, reflects the industry's struggle to secure sufficient supplies. The decision underscores the unprecedented challenges faced by smelters.

The scarcity of concentrate has pushed spot TC/RC prices into negative territory since December, rendering benchmark prices meaningless. Negative TC/RCs mean smelters must pay miners to process concentrate into refined metal rather than receiving payment for the service. This unusual dynamic highlights the extreme pressure on smelters' profit margins. As of March 28, the Shanghai Metals Market copper concentrates TC/RC index stood at -$24.14 per metric ton and -2.41 cents per pound.

Several smelters have already begun equipment maintenance, choosing to shut down plants during March, a traditionally peak demand period, to mitigate losses from the shortage. Planned maintenance in the second quarter further reduces the need for guidance, as smelters will purchase fewer spot cargoes. These shutdowns are unusually extensive for this time of year.

The concentrate supply crunch is expected to persist due to ongoing smelter expansions, further straining the market. To combat the shortage, Chinese smelters are exploring alternative methods such as increasing the use of secondary copper materials and expanding blending capacities.