[SMM Analysis] The "Counter-Cyclical" Logic of Copper Smelting: When Sulfuric Acid Becomes the Main Product

On March 13, 2026, China's copper smelting industry set a new historical record. According to SMM data, the imported copper concentrate index closed at -60.39 USD/dmt, officially breaking through the -60 USD level.

This appears to be a business where "the more you produce, the more you lose," yet Chinese smelters have shown robust procurement demand. Recently, some mining companies even sold clean concentrate from South America for April shipment at mid-range -60 USD levels. Behind this paradox lies a fundamental shift in the industry's profit logic.

Customs data shows that China's copper concentrate imports showed signs of weakness in the first two months of this year: January imports stood at 2.624 million dmt, down 2.96% month-on-month; February imports were 2.31 million dmt, down 11.97% month-on-month. This data might easily lead to the conclusion that "smelting demand is weakening." However, the opposite is true. SMM surveys indicate that although smelters involved in maintenance in the second quarter total 2.88 million tons, the spot demand from Chinese smelters remains strong. The cumulative year-on-year increase of 4.9% suggests that amidst deeply negative treatment charges, the rigid demand for raw materials has never disappeared.

Supporting this anomaly is a by-product of copper smelting—sulfuric acid.

The SMM China Smelting Acid Index has risen to 1,050 RMB/ton. The strength of the sulfuric acid market results from a confluence of multiple factors: Geopolitical tensions in the Middle East have disrupted sulfur logistics, directly pushing up smelting acid costs from the cost side; demand growth in agriculture, new energy, chemical and other industries has formed a solid bottom for sulfuric acid prices.

The systemic outperformance of sulfuric acid revenue is changing production decisions for smelting enterprises. In the traditional model, copper concentrate treatment charges (TC/RC) are the core profit source; currently, sulfuric acid has leaped from a "supporting role" to the "leading role." Even if copper concentrate treatment charges are zero or negative, large-scale smelters can still achieve certain profitability after comprehensively considering recovery rates and by-product revenue. Sulfuric acid is becoming the "cash flow buffer" for smelting enterprises to maintain high operating rates.

Against the backdrop of deeply negative treatment charges, those who can better harness by-product revenue and optimize raw material structure will seize the initiative in this counter-cyclical period. The rise of sulfuric acid is not only a shift in the industry's profit logic but also a footnote to the maturation of China's copper smelting industry—when the main business is under pressure, the value of the side business can often determine an enterprise's survival.