Copper Smelters Face Low TC/RCs Amid Tightening Concentrate Supply in 2025
Treatment and refining charges (TC/RCs) for copper concentrate are expected to remain low throughout 2025 due to a tightening global supply, according to a new report by Fastmarkets. Analyst Andrew Cole forecasts the annual average spot TC at $10.7 per tonne for 2025, with monthly averages potentially reaching $20 per tonne by the end of the year. This forecast extends the sharp decline in TC/RCs observed in 2024, as expansions in smelter capacity outpaced the availability of concentrate. In April 2024, Fastmarkets’ weekly copper concentrate TC/RC index fell into negative territory for the first time, reflecting the severe imbalance in the market. Analysts expect this trend to persist over the coming year.
Chile, the world’s largest copper producer, has forecasted a 3.4% reduction in copper supply for 2024, further tightening the market and pushing TC/RCs lower. Recent industry data shows that 2025 TC/RC forecasts are significantly lower than the $80 per tonne benchmark set for 2024. Some offers have even dropped to as low as $10 per tonne, creating tension between buyers and suppliers. Smelters have begun adapting their contracting strategies in response. Many are reducing volumes purchased under fixed-price annual contracts and increasing reliance on agreements tied to spot pricing. This shift reflects efforts to navigate volatile market conditions, although negotiations between smelters and suppliers remain difficult.
In China, smelters are increasingly turning to intermediate products such as blister copper, anodes, and copper scrap to address supply shortages. During mid-2024, abundant supplies and favorable prices for these materials allowed smelters to ramp up their usage. However, market participants are uncertain whether these trends will continue in 2025. Copper scrap supplies are highly sensitive to price fluctuations, expanding during periods of higher prices and contracting sharply when prices fall. Policy changes, including potential tariffs between China and the US, add further uncertainty, discouraging Chinese importers from relying on US-origin scrap.
With refined copper demand facing headwinds and TC/RCs under pressure, smelters are becoming increasingly reliant on byproduct revenues to maintain profitability. Sulfuric acid, a key byproduct of copper smelting, provided significant financial support for smelters in 2024 due to strong pricing. However, the outlook for sulfuric acid in 2025 remains unclear, leaving smelters exposed to potential revenue declines. Other byproducts, such as gold, silver, and minor metals recovered during the smelting process, may also play an important role in offsetting losses caused by low TC/RCs.
Copper smelters face a challenging year ahead, navigating a combination of tightening concentrate supply, market volatility, and uncertain demand for refined copper. Flexibility in sourcing and increased focus on byproduct profitability will be critical for maintaining operations under these conditions.
