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The traditional annual benchmark system for copper concentrates was facing its biggest test yet, with sector participants preparing for the London Metal Exchange’s LME Week event in London, October 13-17, 2025.Some market sources were predicting that the benchmark figure could turn negative for the first time in history, while others suggested that separate regional agreements may emerge amid persistent supply tightness.
Market participants gathering in London will use the event as early positioning ahead of formal negotiations for the fourth-quarter copper concentrates benchmark, with unprecedented questions looming over the 2026 annual treatment and refining charges (TC/RCs).
Many market participants were questioning whether the traditional copper concentrates TC/RC benchmark system still reflected current market conditions, with spot TC/RC indices falling well below the benchmark level. The wide price gap between sellers and buyers has cast doubt over how many will continue to follow the benchmark system, industry sources said.
One mining source said that the traditional benchmark system was increasingly difficult to apply to today’s copper concentrates market, not only due to the wide price gap between sellers and buyers, but also because rapidly changing market conditions made it hard to agree on a fixed number that would satisfy both sides.
The same source also expressed doubt over whether other sellers would adhere to the benchmark if they could achieve significantly better terms in the spot market.
“If the benchmark settles at zero, or a small negative such as minus $5 or $10 per tonne, do you really think sellers will follow that number when they can easily sell in the minus $40s in the spot market?” the source said. “They might just reduce the volumes they tie to the benchmark instead.”
Some market participants, however, believed that the traditional benchmark system will persist, but only as a symbol.
“I think the traditional benchmark system will continue to exist, but more as a symbolic reference,” a second mining source said. “Its market influence will probably diminish over the next one to two years, because many [sector] participants are already moving away from fixed benchmark numbers in favor of spot index-linked contracts.”
“Where’s the benchmark going to land? I honestly do not know,” a third mining source said. “[It] could be negative $10, zero, positive $2… I would not be surprised by any of those scenarios.”
Estimates heard in early September for the 2026 annual benchmark ranged from zero to the positive single digits; but those projections came before major mine disruption] at Grasberg in Indonesia, and El Teniente in Chile, intensified market tightness.
Other sources suggested that it would land in deeper negative territory – unprecedented for the benchmark, which only two years ago was at $80 per tonne, and $21.25 per tonne in 2025.
A European trader predicted that the benchmark would settle between negative $5 and negative $15 per tonne, calling it “a symbolic benchmark” with only small tonnages sold under those terms.
“If the year-end benchmark settles at $0 per tonne, that might be the best outcome, in my view,” a second trader said. “But I wonder how many sellers will actually follow that number, when spot TC levels for smelter buying are in the low negative $40s per tonne.”
Multiple sources questioned whether a unified global benchmark was still sustainable, pointing to the fragmented outcomes of mid-year supply talks between miners and smelters in China, Japan, South Korea and Europe.
The mid-year settlement at $0 per tonne (0 cents per lb) between Chilean miner Antofagasta and smelters in China and South Korea has effectively set a new floor for negotiations.
But Japanese copper smelters did not reach a mid-year agreement with the miner, while European smelters were also seeking a different figure from that agreed with Chinese buyers for 2025 supply, highlighting the growing regional divisions in the benchmark system.
“[It is] possible that the benchmark will end up with regional differences,” a second mining source said, noting differences in regional acid prices as another factor influencing the market.
“Everyone with a reasonable understanding of the market right now will say that the benchmark should be negative,” a fourth mining source said. “But for Chinese [smelters], it’s more a political decision than an economic one – it will be more difficult for them to settle for negative terms.”
“If there is a benchmark, which there will be,” the first trader said, “[I am] certain that it will be a negative benchmark.”
A third trader hoped that the current system would continue. “I certainly hope that the benchmark system continues,” this source said. “I do not [expect to] see Mitsubishi [Materials] walking away from that contract.” He indicated that the alternative spot prices were unlikely to be preferable.
Fastmarkets assessed the copper concentrates TC index, cif Asia Pacific – the mid-point between smelter and trader buying levels – at $(65.40) per tonne on October 3, down by $2 per tonne from $(63.40) per tonne on September 26.
With benchmark uncertainty mounting, market participants were exploring alternatives including index-linked pricing and shorter-term contracts.
A trading company source, who has been analyzing copper for decades, said that the copper concentrates market could “evolve to full-on index pricing,” describing the current benchmark system as “antiquated” while the market goes “through [the] growing pain of evolution.”
Several industry sources said that miners will evaluate how to balance tonnage between annual contracts and spot sales for 2026.
“Seventy to eighty per cent [of production is] going to long-term contracts – [that is] definitely changing, [with] more moving into spot right now,” a fourth mining source said. “Many smelters [are also] reluctant to commit to terms that are too low for them. [It is a] game of ‘chicken’… perhaps waiting for spot terms to improve, waiting for a benchmark.”
But the fourth mining source said that their company hoped to “maintain a diverse client base” and to evaluate allocations annually. “We allocate units commercially where we think we’ll get the greatest benefit,” the source said, noting that negotiations begin during LME Week.
But market participants saw a challenge in maintaining regional diversity when Chinese smelters offered the most competitive freight costs and payables.
“In the old days,” a fourth trader said, “it was easier to diversify, in the sense that you have logistic differences and payable differences – [it was] clear that Japanese and Europeans [smelters were] more efficient and [could afford] higher payouts, [and] freight [costs were] not the same.
“But today that’s no longer the case,” he added. “Freights to China [are the] most competitive. Chinese payables [are] improving substantially – technically speaking, there’s no real reason to sell to anyone but China.”
But the fourth mining source noted the potential problem of balancing the counterparty risk: “We do not want to sell to someone [unfamiliar] who may fall into a difficult financial situation,” he said, “who may not be able to pay us or take our material. This is a long-term business for us, so we’re comfortable supporting partners in the long term.”
“Which smelters will survive 2026?” a fifth trader asked, noting that annual benchmark negotiations would put additional pressure on facilities already operating at losses.
The annual benchmark for 2025 provided some kind of lifeline for smelters this year, but market sources said that any benchmark at or below zero would remove that support.
Several ex-China smelters have announced capacity reductions or received government support to continue operations, though market sources said that large-scale closures have not materialized as expected.
Japan’s Mitsubishi Materials announced in August that it would reduce copper concentrate processing at its Onahama Smelting and Refining business and increase the volume of recycled materials to maintain profitability. JX Nippon Mining & Metals made similar cuts in June.
“It’s not a competition [about] how to win, but how to handle the losses for a longer time,” the fourth trader said.
“Market conditions will become even tougher for copper smelters next year, with no relief on the raw material supply side and essentially no good news,” one smelter source said. “But is that really good news for the industry as a whole?”
The fourth mining source said that Chinese smelters may avoid formal closures due to their integration into larger value chains. “Smelters as part of a larger value chain – wire and cable, electric cable, vehicles. It will make sense for countries to support smelting facilities in order to secure downstream processing,” the source said.
As of October 8, Glencore’s Mount Isa Copper Smelter has received a A$600 million ($393 million) government support package from Australian state and federal governments to continue operations until the end of 2028. The facility, along with the adjoining Townsville Refinery, processes as much as 300,000 tonnes per year of copper cathode.
The fourth mining source said that alternative financing could come through “low interest credit lines [or] government loans,” noting that “several Chinese facilities have physical targets rather than economic targets.”
Recent supply disruptions at major mines have intensified tightness in the concentrate market, the most significant of these being the mudslide at Grasberg and disruptive strikes at Las Bambas in Peru. Meanwhile, the Cobre Panama mine has yet to restart operations.
Codelco’s El Teniente mine in Chile had to deal with the consequences of an accident last July. The fourth mining source said that the reduction in production for this year had yet to be officially announced, with the affected area still not reopened, though it “was supposed to start feeding the plant this year.”
The source noted that El Teniente consists of “a conjunction of different sectors” and can replace some material from affected areas, though with lower grades.
Meanwhile, Ivanhoe Mines reported on October 7 that Kamoa-Kakula in the Democratic Republic of Congo (DRC) produced 71,266 tonnes of copper in the third quarter of 2025, with dewatering activities more than 20% complete following earlier flooding. The company maintained its 2025 production guidance figure of 370,000-420,000 tonnes of copper in concentrate, expecting higher-grade mining from mid-November.
The International Copper Study Group (ICSG) said on October 8 that world copper mine production was expected to increase by 1.4% in 2025, revised downward from 2.3% in April 2025 “due to the major incidents that negatively affected output at the Grasberg and Kamoa mines.”
ICSG forecast only 2.3% growth in 2026 for copper concentrates, supported by a continued ramp-up of new capacity, expected improvements in Chilean, Peruvian and Zambian output, and recovery of operational rates in Indonesia.
Finally, market participants continued to note the widening gap between smelter and trader buying prices, with questions about sustainability.
Fastmarkets’ bi-monthly copper concentrates counterparty spread was assessed at $42.85 per tonne on October 3, the widest level since $43 per tonne on June 27.
Oil and gas trading houses including Mercuria, Vitol and Gunvor have entered the copper concentrates market with aggressive bidding strategies.
“The space is getting more crowded,” a fifth mining source said. “All these guys [from] oil [and] grain [are] coming in to do concentrates [to] build a book, [bidding] silly numbers. At what point in time does this end? Someone’s going to run out of money… the question is who?”
Traders may also face a reshuffling under the current volatile tender market.
“It’s really a question now whether small and even medium-size traders of copper concentrates will survive amid more and more intensified market competition,” a fifth trader said. “As you see from results of tenders for a while, they are unable to afford such high costs to buy copper concentrates to book their positions.”
The third trader captured market sentiment, saying that although the path forward remains uncertain, “this business will never die.”
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