Copper prices surge sharply; Chinese enterprises are reluctant to 'pay the bill'.

As for the explosive growth of AI, it is not only driving electricity consumption to new highs but also elevating copper to the status of 'oil of the new era.' The copper intensity (copper consumption per unit) of supercomputing centers or intelligent computing centers far exceeds that of traditional facilities. Dongzheng Derivatives Research Institute forecasts that data center demand for copper will reach 410,000 tons in 2025. Global copper demand related to new energy sources for this and next year Source: Dongzheng Derivatives Research Institute Demand looks promising, yet supply is faltering: since mid-year, multiple global copper mines have experienced concentrated production halts—naturally, no copper can be magically produced! For instance, at the end of May, the Kamoe-Kakula copper mine in the Democratic Republic of Congo (the one acquired by Zijin Mining) suspended operations for approximately 21 days due to a mining-induced earthquake; at the end of July, the El Teniente tunnel collapse in northern Chile halted production for about 11 days; and at month-end, Indonesia’s Grasberg copper mine’s main mining area and the Manyar smelter were shut down due to mudflows—and remain offline to date. Collectively, these disruptions have resulted in a loss of at least approximately 409,000 tons of copper output, further tightening global copper supply flexibility. According to the Secretary-General of the International Copper Association (ICSG), speaking at the 2025 Asia World Copper Conference, global copper production growth is expected to slow to 0.9% in 2026, down from an anticipated 3.4% in 2025; the global copper market is projected to face a supply deficit of 150,000 tons in 2026. UBS’s forecast is even more direct: the global copper supply deficit will reach 230,000 tons in 2025 and widen to 407,000 tons in 2026—up from previous estimates of 53,000 tons and 87,000 tons, respectively. The Federal Reserve’s interest rate cut expectations are another critical variable influencing copper prices: market consensus widely anticipates that once the Fed cuts rates in December, copper prices may rise further—but overall, the probability of a December rate cut remains high, with U.S. interest rate futures indicating a likelihood exceeding 84%. Want to 'name your price'? Better think twice. Any commodity price hike often triggers hoarding and price manipulation. Faced with copper’s relentless upward trajectory, market nerves are already fraying: an offer presented at the Shanghai World Copper Conference at the end of November exemplifies this sentiment in full force! According to Securities Times China and China Wire & Cable Network, Codelco—the world’s largest copper producer and Chile’s state-owned copper company—has proposed to Chinese buyers an annual refined copper contract premium for 2026 of USD 335–350 per ton—surging over 275% compared to USD 89 per ton in 2025. Moreover, the terms are extremely stringent: 'Take it or leave it.' Goodness—nearly a 300% increase! Not only does this set a new historical record, but it also vastly exceeds current spot premiums (under USD 40 per ton). Selling futures at such a steep premium over spot prices is nothing short of 'gouging.' No wonder, according to foreign media reports, at least three Chinese smelters or traders have stated they would rather forgo long-term contracts and procure spot copper instead. One buyer who had not yet received the formal quotation bluntly remarked, 'At this price, who would buy?' So the question arises: what exactly emboldens Codelco to 'name its price' so brazenly? The most direct reason is, of course, confidence derived from a seller’s market: global copper supply is tight, leading sellers to believe 'if you don’t buy, others will,' and even prompting instances of 'negative processing fees'—i.e., smelters paying miners to process raw materials. In other words, smelters must both pay for ore *and* pay for processing—a bizarre anomaly that naturally gives miners the sense they can 'hold you hostage!'

Amid falling ore-to-smelting margins, how are copper smelters staging a comeback? Take Yunnan Copper as a case study.

Caption: COMEX vs. LME copper price spread; data source: Tonghuashun This structural price differential has triggered an unprecedented geographical migration of inventories. Traders, seeking arbitrage opportunities, have continuously shipped copper to the United States, propelling COMEX copper inventories into a steep upward trajectory this year. As of December 1, COMEX copper inventories have surged to nearly 430,000 short tons—surpassing the historical peak recorded in 2003 and reaching the highest level since the exchange’s inception. Caption: COMEX vs. LME copper inventory trends; data source: Tonghuashun Kostas Bintas, Head of Metals at global commodities trading giant Mercuria, stated that the revival of a highly profitable U.S. arbitrage window has siphoned off copper supplies from other regions. The concentration of physical copper flows toward the U.S. is creating a dangerous imbalance: this structural flow not only distorts short-term spot markets but may also exacerbate global supply chain fragility. Should sudden supply disruptions or logistics bottlenecks occur, regional shortages could rapidly amplify, intensifying price volatility. Meanwhile, signals emanating from the smelting sector are equally alarming. Tightening copper ore supply has shifted from expectation to reality—and is now triggering a fundamental reallocation of profits across the industrial chain. Smelters’ Path to Breakthrough While global attention focuses on the eye-catching profits of mining companies, midstream smelting players are enduring a biting 'winter.' A coordinated breakthrough by smelters has evolved from a strategic option into an existential necessity. At last week’s Asia World Copper Conference, Codelco—the world’s largest copper producer—presented Chinese buyers with an offer widely viewed as 'landmark': a long-term copper concentrate premium of USD 350 per ton. This figure represents a near-300% surge from last year’s agreed-upon USD 89 per ton, setting a new historical high. Simultaneously, its quote to European customers stands at USD 325 per ton—a year-on-year increase of 39%. This may not be an isolated incident, but rather a concentrated manifestation of global mining giants forcefully resetting profit-allocation rules across the industrial chain amid growing resource scarcity expectations. The smelting sector’s predicament stems partly from a disastrous misalignment between its own expansion cycle and the industry’s profit cycle. Compared with massive, long-construction-cycle copper mining projects, copper smelting capacity entails relatively lower investment thresholds and shorter construction timelines—offering greater flexibility. Looking back to 2022–2023, when copper smelting treatment charges (TC/RC) were comparatively high and prices of by-products like sulfuric acid remained persistently strong, the smelting segment enjoyed robust profitability. This optimistic signal spurred a wave of intensive capital investment globally—especially among Chinese smelters. Major enterprises—including Jiangxi Copper, Yunnan Copper, and Jinchuan Group—saw their capacities come online en masse during 2023–2024. Caption: Capacity changes among major domestic copper smelters; data source: corporate announcements This year, copper concentrate supply has tightened due to various disruptive factors, while the smelting sector faces intensified competition stemming from concentrated capacity releases. This mismatch in supply-demand structure acts like two opposing clamps, squeezing processing fees to historic lows. Currently, smelters are still operating under long-term contracts signed at the end of 2024, with a benchmark TC/RC of USD 21.25 per ton. However, the mid-year long-term contract renewed in June 2025 has plummeted to USD 0 per ton—signaling that the copper smelting industry has entered the 'zero-processing-fee era.'

Codelco Sets European Copper Premium at Record $350 a Ton

Oct 20, 2026

Codelco set a record $350-per-ton premium for European copper deliveries next year amid market tightness from US stock shifts. Competitor Aurubis similarly raised premiums as traders assess potential tariff impacts on global supply.

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Codelco Sets European Copper Premium at Record $350 a Ton

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