1.Global Copper Concentrate Supply-Demand Balance Shows Minimal Impact, with Both Supply and Demand Decreasing
According to a report by Freeport-McMoRan, since the slurry accident at the Grasberg copper mine in Indonesia on September 8, two people have died and five are missing. The incident directly led to the suspension of operations at the world’s second-largest copper mine. Freeport-McMoRan estimates that its 2026 production could be 35% lower than previously projected. Based on SMM's assessment, Grasberg’s copper production is expected to be 488,000 metric tons in 2025 (previously estimated at 750,000 metric tons) and 500,000 metric tons in 2026 (previously estimated at 730,000 metric tons). This incident not only affects copper concentrate supply but also impacts copper smelting demand, represented by facilities such as Indonesia’s Gresik and Manyar, resulting in a reduction in both supply and demand. SMM predicts the supply-demand balance for 2025 will be -268,000 metric tons and -308,000 metric tons for 2026.
2.High-Quality Development in the Copper Industry to Break Through "Vicious Competition" Becomes an Inevitable Trend
On September 24, the Fifth Meeting of the Third Council of the Copper Branch of the China Nonferrous Metals Industry Association was held in Xiong'an New Area, Hebei. The issue of persistently low copper concentrate treatment and refining charges (TC/RCs) due to "vicious competition" in the copper smelting industry was the most frequently raised concern by representatives at the meeting and is currently the most pressing issue in the industry. Chen Xuesen, a member of the Standing Committee of the Party Committee and Vice President of the China Nonferrous Metals Industry Association, emphasized in his concluding speech that "vicious competition" in the copper smelting industry has significantly impacted the sector, harming national and industry interests and deviating from the direction of high-quality development. He urged copper industry enterprises to resolutely oppose such practices.
Previous market rumors about a potential cap of 160 million metric tons on copper smelting capacity were neither mentioned nor confirmed at the meeting, and the validity of such claims remains to be examined. According to SMM statistics, China’s copper smelting capacity is expected to be around 12 million metric tons in 2025, with a potential increase of 1.7 million metric tons to 13.7 million metric tons by 2027. China’s copper refining capacity is projected to be around 16 million metric tons in 2025, potentially increasing by 2.53 million metric tons to 18.53 million metric tons by 2027. Whether executable restrictive policies will be introduced, whether they will target smelting or refining capacity, and the timing of policy implementation and restrictions on projects remain to be seen. However, it is undeniable that high-quality development in the copper industry is becoming an inevitable trend.
3.Preliminary Discussions for Copper Concentrate Long-Term Contract Negotiations Begin, with Smelters Facing Pressure by Year-End
In the spot market, the Grasberg incident is not expected to impact China’s copper concentrate spot market. This is because, as of mid-September 2025, the Indonesian government no longer permits the export of domestic copper concentrate. Thus, the Grasberg incident will only affect Indonesia’s domestic copper concentrate supply and demand, with no significant impact on the global copper concentrate supply-demand balance.
Regarding next year’s plans, multiple smelters and copper concentrate suppliers met during this week’s industry conference, primarily to discuss smelters’ production plans for the coming year and intentions for long-term TC rates. Although formal year-end long-term contract negotiations have not yet begun, preliminary discussions and preparations are underway. SMM learned that some sellers at the meeting expressed a preference for signing long-term contracts indexed to spot TCs. This approach would mean that long-term contracts differ from spot contracts only in "volume" but not significantly in "price." Additionally, a few traders indicated that, starting next year, long-term contracts between traders and smelters may no longer be anchored to the benchmark, with an increasing likelihood of adopting third-party indices or bilateral negotiations.
SMM expects the copper concentrate spot market to stabilize before long-term contract negotiations begin in November, with spot TCs remaining in the range of -$40 to -$45 per metric ton. However, after the negotiations, smelters are likely to increase their demand for spot copper concentrate in preparation for winter storage and the Spring Festival holiday, which could put pressure on spot TCs by the end of this year. Furthermore, most market participants at the meeting believe that the upcoming long-term contract negotiations will also face challenges.
