China’s Copper Output Keeps Surging Even as Strains Mount

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(Bloomberg) — Chinese copper output is expected to hit another record this year, although the strains on smelters are starting to mount.

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The industry has kept adding capacity despite a collapse in processing fees, which are now deeply underwater. The government is scrutinizing the expansion and plans to put limits on new facilities. But plants already commissioned won’t be affected, and that’s likely to drive increased production this year and next.

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Refined copper output in the world’s biggest producer is forecast to rise about 4.9% to 12.4 million or 12.45 million tons in 2025, according a survey of smelters conducted by Mysteel Global. That’s faster than the 3.1% growth recorded by Mysteel for last year. 

Meanwhile, smelting fees for spot cargoes of ore have turned negative, with firms paying over $20 a ton to process concentrate, the worst-ever margin, according to Metal Bulletin. In August 2023, they were able to charge almost $90 a ton. While term treatment charges, which cover most of China’s imports, are positive, they’re still below breakeven.

Chinese growth in copper consumption is holding up as renewable energy use more than offsets the demand lost to the construction downturn. But that hardly justifies increasing output if companies are actually losing money on what they produce.

The cutthroat competition is the result of global constraints on concentrate supply. The bigger, government-owned firms are also willing to lift production and sustain losses to support their local economies and retain market share.

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Smelters are looking at operational fixes to mitigate their losses. One typical workaround is to use more scrap copper to replace concentrate. Firms are also buying ore with a higher gold content, or reducing the copper content of their output, said Mysteel analyst Li Chengbin.

More downtime is also likely to be scheduled. Annual maintenance could see about 3.2 million tons of capacity idled for around a month in the second quarter, up from 2.7 million tons in the same period last year, Li said.

On the Wire

President Donald Trump on Monday signed an order to raise tariffs on China to 20% from 10%, shortly before the annual National People’s Congress kicks off in Beijing on March 5. Chinese leaders are expected to stay the course — neither giving in to US pressure nor rushing toward massive stimulus.

Mexico has started a dumping investigation into Chinese laminated steel.

China is considering retaliatory measures on US agriculture and food products in response to tariffs from the Trump administration that are scheduled to take effect on Tuesday, according to the Global Times.

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This Week’s Diary

(All times Beijing unless noted.)

Tuesday, March 4:

• First of China’s two legislative sessions, the CPPCC, begins in Beijing
• EARNINGS: MMG

Wednesday, March 5:

• National People’s Congress begins in Beijing
• Caixin’s China services & composite PMIs, 09:45
• CSIA’s weekly polysilicon price assessment
• CCTD’s weekly online briefing on Chinese coal, 15:00

Thursday, March 6:

• CSIA’s weekly solar wafer price assessment

Friday, March 7:

• China’s Jan.-Feb. trade balance and 1st batch of trade data, ~11:00
  • Crude oil, natural gas & coal imports; oil products imports & exports
  • Iron ore, copper & steel imports; steel, aluminum & rare earth exports
  • Soybean, edible oil, rubber and meat imports; fertilizer exports
• China’s foreign reserves for February, including gold
• China’s weekly iron ore port stockpiles
• Shanghai exchange weekly commodities inventory, ~15:30

Saturday, March 8

Sunday, March 9

• China’s inflation data for February, 09:30
• China to release Feb. aggregate finance & money supply data by March 15

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