Copper Faces Short-Term Surplus but Long-Term Deficit Outlook

[SMM Analysis: The Copper Smelting Industry Faces the Test of Extreme TCs, with Sulphuric Acid and Geopolitics Becoming Key Variables] Since the beginning of this year, the spot market for copper concentrate TCs has shown an unprecedentedly sharp downward trend. The SMM spot copper concentrate index has fallen all the way from -$45/dmt at the start of the year and is now approaching -$70/dmt. Both the speed and magnitude of the decline have been historically rare. So-called negative TCs mean that when smelters purchase copper concentrates, they are not only unable to obtain traditional processing income from miners, but instead must pay fees to the seller. Based on the current TC of -$70/dmt, the cost that smelters actually need to pay to the seller in the copper smelting process is equivalent to a TC of $70, or further converted to a TC+RC of about $112. This extreme price signal has quickly triggered strong market concern over smelter profitability, and has even begun to raise worries about the sustainability of production in China’s copper smelting industry.