China's Grip on Copper Supply Chain Tightens as Prices Soar

The global copper supply chain is experiencing significant upheaval, driven by China's dominance in smelting and refining. Despite high prices for the metal, smelters are being squeezed due to a surge in Chinese capacity additions, which has led to low or negative refining and treatment charges.

According to the International Energy Agency, Chinese smelters operate at an 85% utilisation rate, while western smelters have slipped below 70%. Smelters outside China are reducing production or closing down, while Chinese smelter output is increasing rapidly.

The trend has been underway for two decades, but has accelerated significantly since 2020. In the next five years, China is expected to purchase up to 80% of traded copper concentrate, giving it significant market power in negotiations with mining nations and companies.