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The global copper smelting industry is likely to face “tougher challenges than ever” in 2026, driven by a widening supply-demand imbalance in the concentrates market, rising production risks at smelters and unprecedented market uncertainty, sources have told Fastmarkets.
As of mid-December, there has been little progress made in the negotiations between Chilean miner Antofagasta and smelters in China and Japan for concentrate supply in 2026, but there was consensus among market participants that the 2026 supply talks will probably be most complex yet, owing to the record-low spot treatment and refining charges (TC/RCs) seen in 2025.
“It’s really hard to fix a number between [miners and smelters], with both having strong arguments. But apparently the miner has the upper hand, and it really depends on how they see the market – so, the numbers could be anywhere between $(10s)-$5 [per tonne],” a veteran trader in Shanghai said.
“But will other suppliers follow this number? Apparently not. If the final number is positive or even small negative [numbers], they will be become very ‘creative’ in next year’s supplies, like what we’ve seen this year – either a cap or floor to the number, or link their 2026 supplies to the index pricing method, and this will actually lead to various numbers between different miners and copper smelters, threatening a ‘standard’ benchmark number,” the trader added.
“I really think both miners and smelters need a benchmark number [for this industry], but for next year the number might serve as a symbolic one, not [one that] works for all, either by region or by smelters in China and outside China, like what happened [with] 2025 annual supplies,” a miner in Europe said.
For 2025 supply, the market has not followed a standard benchmark with smelters in China broadly accepting TC/RCs of $21.25 per tonne, while those in Japan and Europe signed deals at various levels between the low $20s to the high $20s per tonne, market sources said.
With uncertainty mounting around the use of a traditional benchmark, market participants have been exploring alternatives including index-linked pricing, which became popular during 2025 supply contract negotiations due to the large price gap between sellers and buyers – despite some resistance from smelters, Fastmarkets heard.
“We are working on an index-linked pricing [mechanism] because we find it’s difficult to reach a fixed number under current market conditions, with spot TC/RCs at record lows now, and continuing [to decline]… we don’t know where the bottom is, so the index-linked [approach] looks a more proper way to reflect the market,” a supplier in Europe said.
“I will not say the index pricing mechanism is perfect, but it is more reflective of a benchmark number, and we are considering using [index pricing when negotiating 2026 supply],” a supplier in Asia told Fastmarkets.
At the end of October, several sources told Fastmarkets that China’s Copper Smelters Purchase Team (CSPT) had agreed to protect the annual benchmark system for copper concentrate supply and not use a spot index-linked pricing mechanism.
Despite prolonged and steeply negative spot TC/RCs, copper smelters – including those in China – have made only limited production cuts in 2025. This resilience is largely due to positive TC/RC terms in some annual contracts and strong support from by-product revenues such as sulphuric acid, gold and silver, according to market participants.
“[The] challenges facing copper smelters are big this year, with spot TC/RCs slumping to [the] negative $40s [per tonne] from positive single digits at the beginning of this year. But smelters also receive solid support from decent profits for by-products, like sulfuric acid and precious metals, helping offset some losses from negative TC/RCs,” a trader in Singapore said.
A second trader in Shanghai noted that there are still positive TC/RC terms for some 2025 annual supply contracts for smelters, adding that “the sulfuric acid market is outperforming this year”, which is also providing strong support to smelters.
But the risk of production disruptions at smelters is expected to grow in 2026 because smelters will be more vulnerable to the performance of these by-product markets and without the benefit of these still-positive TC/RCs locked in their long-term contracts, participants said.
“Production risks and [the] uncertainty facing copper smelters in 2026 will be definitely bigger than in 2025, and there are already some production adjustments [being made] at copper smelters in China and Japan… such low TC/RCs are sustainable for copper smelters’ survival,” a trader in Beijing said.
A smelter source in China noted that cutting production is a complex decision requiring careful monitoring of multiple factors, but added that this does not mean they will not reduce output.
“This year there has already been some adjustments in production, by reducing the usage of copper concentrates for example. Next year, I believe more smelters will take action amid the deterioration of profitability amid the prolonged low TC/RCs,” the smelter source said.
CSPT has repeatedly urged production cuts this year but has yet to announce concrete plans. Meanwhile, Japanese smelters, including Pan Pacific Copper and Mitsubishi Materials, have confirmed plans to reduce smelting capacity due to worsening profitability amid severe tightness in copper concentrate supply, Fastmarkets reported.
But wider disruptions have also been seen across 2025, including at mines like Ivanhoe Mine’s Kamoa-Kakula in Africa and Freeport-McMoRan’s Grasberg in Indonesia, and smelters like PT Smelting’s Gresik operation, also in Indonesia.
These disruptions have added to the market volatility, according to sources.
The suspension at PT Smelting, for example, led to an increase in the premiums paid for copper cathode in Southeast Asia due to reduced supply, and also pushed up the TC/RCs for nearby shipments after these were diverted, Fastmarkets heard.
Fastmarkets calculated the weekly copper concentrates TC index, cif Asia Pacific — the midpoint between smelter and trader buying levels — at $(67.60) per tonne on December 12, down by $0.80 per tonne from $(66.80) per tonne on December 5.
This marked the lowest level since Fastmarkets began to track the market from June 2013, after terms fell into negative territory for the first time on April 26, 2024.
Fastmarkets calculated the copper concentrates TC implied smelters purchase, cif Asia Pacific at $(44.10) per tonne on December 12, down by $0.83 per tonne from $(43.27) per tonne on December 5.
This marked the lowest level since October 10, 2025.
Fastmarkets calculated the weekly copper concentrates TC implied traders purchase, cif Asia Pacific at $(91.10) per tonne on December 12, down by $0.77 per tonne from $(90.33) per tonne on December 5, and at an all-time low.
In 2025, not only did copper concentrate TC/RCs hit record lows, but other markets – including sulphuric acid, precious metals, and London Metal Exchange copper – experienced unprecedented conditions. Copper and gold prices reached all-time highs, while sulphuric acid prices strengthened, helping smelters offset losses and survive despite historically low TC/RCs, Fastmarkets reported.
But market participants have warned of growing risks and uncertainties in these markets amid rapidly shifting dynamics.
“We are in a copper market that has never happened before, with record-high LME copper prices, and record-high annual copper cathode premiums offers for 2026 supply. Meanwhile, we are seeing a very strong performance in the gold and sulfuric acid markets, all benefiting copper smelters,” a second trader in Singapore said.
“Conditions among smelters also vary: copper smelters in China don’t benefit from 2026’s record-high annual copper cathode premiums, but do enjoy benefits from high acid prices; while [smelters] in Japan and Europe enjoy record-high copper cathode premiums, which makes the whole picture complicated,” the trader added.
Sulfuric acid prices in China’s domestic and export markets have outperformed in 2025, with the export price averaging $60.80 per tonne during the first ten months of the year, a year-on-year increase of 115%, according to Chinese customs data.
Market participants attributed the strong performance of sulphuric acid prices to sulphur shortages and robust demand. But domestic sulphur prices began to weaken in mid-December amid increased supply and export controls on fertiliser, Fastmarkets reported.
“The domestic sulfuric acid price remains high so far, reaching more than 1,000 yuan ($142) [per tonne] in some regions, and [the higher price] takes time to be passed onto the acid market from sulfur market, which is still very high now,” a second smelter in China said.
As a key by-product, sulphuric acid is critical to smelters’ profitability – especially now, with Chinese smelters struggling under record-low TC/RCs, according to sources.
Looking ahead, Fastmarkets analysts expect LME copper prices to rise further due to supply-demand imbalances in the refined market, while TC/RCs are likely to fall as concentrate market tightness persists. This creates a dilemma: rebalancing the concentrate market would require smelter production cuts, which would only worsen shortages in the refined market.
On top of these challenges, policy uncertainty and broader trading risks – such as default risk under extreme conditions – are expected to add further volatility to the copper market in 2026, according to market participants.
“In my opinion, one of biggest market changers in 2025 is [the threat of] US copper import policy. You never know if there will be another game changer in 2026, but for me one thing is pretty clear, that there is higher trading risks behind these record highs and record lows, and I will take extra care in choosing my trading partners to avoid any potential risks,” a third trader in Shanghai said.
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