Copper Prices Surge as Global Smelting Capacity Outpaces Mining

Copper prices have hit record levels due to a global mismatch between mining and smelting capacity, according to the Indian Primary Copper Producers Association (IPCPA). Comex stocks have surged to a record 6,75,000 tonnes while inventories in LME warehouses have fallen to critically low levels, tightening metal availability in other markets. This has led to copper being shipped to the United States to take advantage of the price premium between the Comex and LME markets.

The US Commerce Department's report on potential copper import tariffs is nearly two months overdue, but the market continues to price in the possibility of trade restrictions, supporting elevated prices. China's expansion of smelting capacity has placed additional pressure on an already constrained supply of copper concentrates. As a result, treatment and refining charges (TC/RCs) have fallen to unprecedented levels of around negative $1,300 a tonne.

The divergence between mine supply and smelting capacity is creating a structural constraint in the copper market, rather than simply reflecting a temporary inventory imbalance, IPCPA said. Copper is increasingly viewed as a strategic industrial commodity due to its extensive use in power grids, electric vehicles, renewable energy, construction, and other infrastructure associated with electrification and the energy transition.