China: Copper concentrate treatment and refining charges to remain under pressure on tight supply

• Supply tightness in concentrates continues to pressure TC/RCs
  
  
• Smelter margins under severe stress amid negative TC/RC regime
  
  

China's clean copper concentrate treatment and refining charges (TC/RCs) are likely to stay under pressure in Q2 2026 due to ongoing tight global supply, as noted by traders, producers, and smelters.

This is partly because export permits for Indonesia's Batu Hijau mine are expiring in April, which could reduce shipments. At the same time, the Democratic Republic of Congo's Kamoa-Kakula smelter has started consuming its own concentrate, limiting availability in the export market.

As per reports, the CIF China clean copper concentrate treatment charge and refining charge at minus $78.50/t and minus $173/t respectively, on 9 April.

Q1 saw TC/RC fell so low that smelters struggled both to finalize term deals and to maintain operations. Several Japanese smelters secured long-term contracts with suppliers at treatment charges of $15-$25/t for 2026-loading shipments, with some negotiations continuing into Q2.

Japan's Mitsubishi Materials will stop processing copper concentrate and suspend related smelting operations at its Onahama smelter and refinery by the end of March 2027 due to low TC/RC.

Copper concentrate market scenario

Copper concentrate exports from Indonesia and the Democratic Republic of Congo-both key suppliers of high-grade material-totaled 2.27 million metric tons in 2025, according to customs data. However, market participants expect these volumes to decline significantly in 2026 due to tightening export restrictions.

Spot demand for copper concentrate also strengthened in March, even as some Chinese smelters slightly reduced output in Q1. This was driven by supply concerns following shipment delays from Peru caused by rough sea conditions, according to producers and traders. Consequently, demand for prompt cargoes increased, with several Chinese smelters advancing shipments under long-term contracts.

The global copper concentrate market continues to face significant tightness, keeping treatment and refining charges (TC/RC) under sustained pressure entering Q2 2026. The negative TC/RC environment reflects an acute shortage of spot concentrate availability, driven by supply disruptions and firm demand from smelters, particularly in China.

Supply-side constraints intensify

Mine supply remains constrained due to operational challenges, lower-than-expected output, and delays in project ramp-ups across key producing regions. This has reduced the availability of spot cargoes, forcing smelters to compete aggressively for limited material.

Additionally, disruptions in Latin American mining regions and declining ore grades have further tightened the supply pipeline, exacerbating the imbalance between concentrate availability and smelting capacity.

Smelter pressure and operational challenges

Chinese smelters are facing mounting margin pressure as TC/RC levels remain deeply negative. With processing costs exceeding returns, smelters are increasingly reliant on long-term contracts and alternative feed sources to sustain operations.

Some smelters have adjusted maintenance schedules or reduced operating rates to mitigate losses, while others are exploring blending strategies and secondary materials to offset concentrate shortages.

Refined output remains strong amid shift to alternative feed

Refined copper production in China remained elevated as smelters increased the use of alternative, domestically sourced feedstocks - including concentrate, blisters, anodes and scrap - according to market participants.

China-s refined copper output reached 2.47 million t over January-February, up 9% year on year, as per official data.

Scrap usage as an alternative smelter feedstock also increased during Q1. Japan's scrap imports rose 50% y-o-y to 64,470 t over January-February, while South Koreas imports increased 43% to 61,116 t during the same period.

In addition, offers for non-standard materials - including gold concentrate, silver concentrate, crude copper ore and pyrites - strengthened, supported by smelters production requirements as well as elevated sulphuric acid prices.

Term contract negotiations

Term contract discussions for 2026 shipments indicate significantly lower benchmark expectations, with deals reported in the range of $15-$25/t. This marks a sharp decline from historical norms and underscores the structural tightness in the concentrate market.

Negotiations extending into Q2 highlight ongoing uncertainty, as both miners and smelters reassess pricing mechanisms in response to evolving market dynamics.

Demand scenario

Despite supply-side challenges, demand for refined copper remains resilient, supported by continued growth in electrification, renewable energy, and infrastructure sectors. This has kept smelter utilization incentives intact, even under unfavorable TC/RC conditions.

outlook

The copper concentrate market is expected to remain tight in the near term, with TC/RC likely to stay under pressure through Q2 2026. Any meaningful recovery will depend on improved mine supply, easing of disruptions, and stabilization in contract negotiations. Until then, smelters are expected to operate under constrained margins amid continued competition for raw materials.