China's Copper Grip Tightens Amid Record Price Surge

Copper prices have reached an all-time high of $6.80 per pound, and experts warn that supply tightness and China's growing control of the smelting and refining process could lead to a further price surge.

The copper market is being driven by strong demand from industries such as construction, plumbing, and electric vehicles, which require more copper than traditional internal combustion engines. However, supply is being squeezed by a lack of new mine developments, closures of old mines, falling copper grades in existing mines, and 'outage' events such as the recent seismic event at Chile's El Teniente underground mine.

Brendan Pearson, former chief executive of the Minerals Council of Australia, has warned that China's dominance in the smelting and refining process could become a geopolitical chokepoint. He notes that Chinese smelters are driving global competition to the wall by over-developing their capacity, causing prices to drop and effectively killing competition from other countries.

Pearson cites figures showing that since 2005, China has accounted for over 90% of the growth in copper smelting output, while its utilization rate is running at 85%. In contrast, western smelters have slipped below 70% utilization and are reducing production or closing altogether.