Chinese Copper Smelters Halt Operations Amid Severe Feedstock Shortages

China’s major copper smelters have begun extensive equipment maintenance in March, a period typically marked by peak demand, as they struggle with a worsening shortage of copper concentrate. This unusual timing underscores the severity of the challenges faced by the industry, which is grappling with overcapacity and plunging treatment and refining charges (TC/RCs). According to Hongyuan Futures, approximately 980,000 metric tons of smelting capacity—8% of China’s total—will undergo maintenance this month, a figure significantly higher than in previous years

Roughly 8% of China's smelting capacity is undergoing maintenance in March

The scarcity of copper concentrate has been exacerbated by disruptions at major mines, including First Quantum’s Cobre Panama mine, and the continued expansion of global smelting capacity. This imbalance has driven TC/RCs into negative territory, forcing smelters to pay miners or traders to process concentrate into refined copper instead of earning revenue from the process. On March 7, Fastmarkets reported record-low TC/RCs at -$26.5 per ton and -2.65 cents per pound.

Copper concentrate treatment fees hit record lows in March

Tongling Nonferrous Metals Group, one of China’s largest copper producers, began month-long maintenance on some of its smelting equipment in early March. The company accounted for 13.5% of China’s refined copper output in 2023. Analysts suggest that by shutting down equipment for maintenance, smelters aim to reduce their consumption of scarce copper concentrate and stabilize treatment fees.

Tongling Nonferrous Metals begins maintenance amid market strain

The industry’s difficulties will take center stage at the upcoming quarterly meeting of the China Smelters Purchase Team (CSPT) on March 31. Analysts expect discussions to focus on potential production cuts to address the ongoing crisis. Patricia Barreto, senior analyst at S&P Global Commodity Insights, warned of a significant risk of large-scale output reductions among Chinese smelters this year. If implemented, these cuts could lead to lower domestic refined copper production and increased reliance on imports

Production cuts could lead to increased Chinese copper imports

This situation reflects broader global challenges in the copper market. Overcapacity in China—the world’s largest producer and consumer of refined copper—has intensified competition for raw materials. Meanwhile, other regions are also feeling the strain; Glencore’s Pasar smelter in the Philippines was placed on care and maintenance in February due to similar pressures.