The mid-year negotiations are approaching, and the imbalanced supply-demand structure of copper concentrate will have far-reaching impacts[SMM Analysis]

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Antofagasta’s mid-year negotiations with smelters in China, Japan, and South Korea are imminent, during which Antofagasta will launch negotiations with smelters. From the current situation, the outlook for buyers is not optimistic.

First, a sharp decline in TC (treatment charges) can be easily observed in the spot market, driven by the surging demand for copper concentrate from global copper smelters. Smelters have initiated a "resource scramble," sparing no effort to compete for limited spot resources at lower processing fees to ensure electrolytic copper production. Since 2025, the copper concentrate spot market has shown a polarized landscape: leading smelters have been active and concentrated in procurement, while mid-sized and small smelters have tended to adopt a "wait-and-see" approach in purchasing.

Second, in terms of fundamentals, based on the production information released by listed mining companies and combined with SMM’s research, the global sulfide ore production in 2025 is expected to be 19.973 million kt (metal tons), falling short of expectations. The supply increase of sulfide ore in 2025 is also below expectations, reaching only 327,000 kt.

On the demand side, with the continuous advancement of smelter projects, the demand for copper concentrate has continued to increase. As shown in the figure below, the global copper smelting capacity is expected to increase by a total of 4.28 million tons from 2024 to 2026. In addition, foreseeable copper smelting projects in the future include Kunming Jinshui Copper Industry, Henan Jinli Jinqian, Hunan Yuneng Phase I, and Hubei Qiangxing New Material Technology Co., Ltd. Potential future copper smelting projects also include Zijin Mining Ya’an Smelter, Minmetals Copper Hunan Smelter, Kaz Minerals’ new project, and the China-Russia Nickel cooperation project. It can be seen that the supply pressure of copper concentrate will be very high in the future.

In summary, due to the harsh spot market and imbalanced supply-demand dynamics, SMM believes the following challenges will arise:

1. The upcoming long-term contract negotiation process will be more difficult. Antofagasta’s mid-year negotiations with smelters are about to begin at the end of the month, while BHP’s spot tender will close on May 20. Mining companies taking the lead at this opportune time will have a negative impact on negotiations.

2. The downward trend in copper concentrate spot TC is difficult to curb, let alone reverse. Since May 2025, copper concentrate spot TC has shown signs of stabilization, with spot transaction TC for smelters/traders struggling to break through the midpoint of -$40. Although TC has recently shown "bottom support," continued deterioration of spot TC is only a matter of time against the backdrop of imbalanced copper concentrate supply-demand dynamics.

3. Production enterprises and international traders in the copper industry may face risk events. High raw material prices have led to a decline in raw material cost-performance and losses for production enterprises, further deteriorating corporate cash flow. The economic downturn cycle, coupled with the copper concentrate supply shortage cycle, has exposed participants in China’s copper concentrate market to increased credit risks and production and operational risks.

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