Copper smelters’ treatment and refining charges (TCRCs) have slid toward cycle lows—often a tell that concentrates are scarce and that the refined market could tighten next. Here’s what falling TCRCs say about supply, demand, and the price risks to watch.
TCRC 101 — The fee that tells the story
Treatment and refining charges are the fees miners pay to smelters to turn copper concentrate into refined metal. When TCRCs fall, smelters earn less per tonne processed—sometimes so little that running at full tilt no longer makes sense. In a tight concentrate market, TCRCs can plunge because miners have the upper hand and smelters compete aggressively for feedstock. Conversely, when mines are flush with concentrate, TCRCs tend to rise as smelters regain bargaining power. (metso.com)
What’s unusual in 2025 is how far they’ve fallen. Spot terms have been persistently depressed, and even the annual “benchmark” agreed for 2025 landed at the lowest in decades. In June, a widely watched spot gauge hovered around –$45/ton TC and –4.5¢/lb RC—meaning smelters were effectively paying miners to take concentrate. The 2025 annual benchmark around $21.5/ton was also the weakest in at least 20 years. (Reuters)
Then came a shocker: some Chinese smelters struck $0/0¢ mid-year processing terms with Chile’s Antofagasta—a record low that underscored just how tight the concentrate pool has become. Such terms deepen the squeeze on smelter margins and raise the odds of run-cuts later in the year. (Reuters)
Why concentrate is tight: disruptions meet overbuilt smelting
Two forces are colliding:
- Mines have under-delivered relative to expectations.
The closure of Panama’s Cobre Panamá mine in late 2023 removed ~1% of global copper and remains unresolved; authorities only recently allowed exports of stockpiled concentrate while the site itself stays shut. In Africa, Kamoa-Kakula in the DRC cut 2025 output guidance after seismic activity and flooding—another hit to feeds that were supposed to be rising. (Reuters) - Smelting capacity—especially in China—grew faster than mine supply.
China’s refined copper output has surged on new smelter startups, even as feed tightens. Reuters notes refined output growth remained strong into 2025, and some Western smelters have already gone offline (e.g., Pasar in the Philippines, Tsumeb in Namibia) amid margin pressure—evidence of a system straining at the seams. (Reuters)
This mismatch isn’t just theoretical. It’s showing up in corporate behavior. In Japan, Mitsubishi Materials said it may scale back concentrate processing at Onahama due to worsening TCRCs, pivoting more toward recycled inputs—another sign that primary feed economics have turned hostile. (Reuters)
Demand: EVs and the grid keep pulling—even as China’s property drags
Copper’s long-term demand anchors—power grids and electrification—are hard to ignore. The IEA projects copper demand to grow ~30% by 2040 in its stated-policies scenario, with grids and clean-energy hardware doing the heavy lifting. A recent Reuters sustainability brief added that grid investment surpassed $390 billion in 2024 and could climb again in 2025, implying sustained draw on copper for lines, substations, and data-center power upgrades. (IEA, Reuters)
EVs add another steady pull: battery-electric cars use multiples more copper per vehicle than ICEs, and charging networks require additional tonnage in cables and transformers. Even conservative outlooks see EV-related copper demand rising materially over the decade. (IEA)
Yes, China’s real-estate slowdown tempers some near-term demand in wiring, motors, and appliances—but the structural electrification wave keeps the baseline firm. That’s why TCRC weakness can coexist with choppy headline prices: the micro-tightness is in concentrates first, with refined markets responding later.
The other puzzle piece: inventories and the “where” of metal
Warehouse stocks don’t set price by themselves, but they shape volatility. LME warehouse copper stocks shrank ~65% year-to-date by late June (to ~95 kt), leaving available tonnage at a two-year low and fueling spread turbulence. Part of this was tariff-driven arbitrage that siphoned metal toward the U.S. and away from LME sheds earlier this year, tightening what’s visible to the market even as total global availability shuffled locations. (Reuters)
In short: when concentrate is scarce and visible stocks are thin, small shocks can move spreads and prices faster than usual.
But wait—ICSG says 2025 could be a refined surplus?
Here’s the nuance. The International Copper Study Group (ICSG) has projected a refined copper surplus for 2025—roughly +0.29 Mt in one recent readout—on expectations that mine projects ramp (e.g., Oyu Tolgoi) and refined output remains high. A refined surplus can coexist with a concentrate squeeze if scrap, secondary feed, and refined inventories bridge the gap—or if smelters push harder on by-product economics (e.g., sulfuric acid). That coexistence is why TCRCs often lead the story: they capture the first choke point. (Recycling Today, Reuters)
Smelter cutbacks are now on the table
When smelter margins compress this far, run-cuts become rational. China’s spot terms turning zero (or negative) and Japanese producers openly discussing cutbacks suggest the industry is nearing a pain threshold. If cuts proliferate, refined output growth slows—feeding back into cathode markets and, ultimately, price. It’s a lagging but powerful lever, and we’ve already seen isolated closures in the Philippines and Namibia under pressure. (Reuters)
Price dynamics: how TCRCs can “front-run” copper
Historically, pronounced down-moves in TCRCs have preceded periods of refined tightness because they signal that mines are not delivering enough high-quality feed relative to smelting appetite. In 2025, the signal is flashing:
- Spot TCRCs near or below zero (extreme stress).
- Benchmark TCRCs at a generational low.
- Run-cuts and maintenance extensions spreading beyond China.
If that pattern holds, refined copper could tighten as we move through maintenance season into Q4, especially if any restart slippages occur at large mines—or if a weather event or logistics bottleneck crimps port flows.
Scenario paths for H2-2025 to 2026 (illustrative, not advice)
| Scenario | TCRCs | Smelter Behavior | Refined Balance | Price Implication (directional) |
|---|---|---|---|---|
| Concentrate stays tight; more cutbacks | Stuck near zero/negative | China slows marginal units; Japan/EMEA trim runs | Refined surplus shrinks; regional premiums rise | Bullish spreads; flat-price support as stocks draw |
| Mines recover; pipeline ramps cleanly | Rebound toward mid-cycle | Smelters lift runs; margins normalize | Surplus widens as projects ramp | Bearish/neutral, more contango, less spread stress |
| Mixed: mine hiccups + policy shocks | Volatile | Stop-start capacity; more tolling/recycling | Uneven, regionally tight | Choppy; higher basis volatility, premiums yo-yo |
Key moving parts: the pace of Kamoa-Kakula recovery, policy outcomes around Cobre Panamá, and the timing of new Asian smelters ramping versus available concentrate. (Reuters)
What to watch (and where to get the data)
- TCRCs (spot and contract).
- Benchmark/spot prints from specialist consultancies get echoed in trade press. Reuters’ June columns document both the benchmark low and negative spot milestones; a mid-year $0/0¢ deal was the capstone. (Reuters)
- ICSG balance updates.
- The ICSG’s Monthly Copper Bulletin and semi-annual forecasts set the tone for refined balances; recent guidance pointed to a 2025 surplus, but project slippages can change that quickly. (International Copper Study Group, Recycling Today)
- LME & CME stocks and spreads.
- Smelter run-rates and by-product pricing.
- Company updates (maintenance, utilization) and sulfuric acid pricing can cushion or compound the squeeze. Japan’s Mitsubishi Materials signaling cutbacks is a canary. (Reuters)
- Mine-supply headlines.
- Kamoa-Kakula guidance changes, any progress/regress on Cobre Panamá, and ramp-up cadence at Oyu Tolgoi and other projects. (Reuters)
EV & grid demand vs. China’s property funk: who wins the tug-of-war?
Near term, Chinese property weakness keeps a lid on some copper uses. But the structural pulls—transmission build-outs, data-center power, and EVs—continue to ratchet higher, with the IEA expecting ~30% demand growth by 2040 under current policies and Reuters noting a new upswing in grid investment in 2024–2025. That pipeline tends to outlast cyclical slowdowns. (IEA, Reuters)
The take-home for readers
- TCRCs are a leading indicator. When they collapse, it often means **concentrate— not metal—**is the constraint. If prolonged, smelters eventually cut runs, shrinking refined supply.
- Inventories amplify moves. With LME stocks low and inventory redistributed toward the U.S. earlier this year, spreads can snap tighter on small shocks. (Reuters)
- The balance can flip fast. ICSG’s 2025 surplus call is real—but it’s an aggregate that can mask regional tightness and short-term squeezes in concentrates. (Recycling Today)
Keep your eye on TCRCs, ICSG updates, LME stocks/spreads, smelter run-rates, and mine-site headlines. That dashboard will usually light up before the copper price does.
Sources & further reading
- Reuters columns and reports on TCRCs, smelter margins, LME stocks, and mine disruptions. (Reuters)
- ICSG monthly/forecast materials for refined balance and project tracking. (International Copper Study Group)
- IEA copper and critical-minerals outlooks for grid/EV demand baselines; Reuters sustainability brief on grid investment. (IEA, Reuters)
- Mitsubishi Materials’ signal on potential cutbacks under low TCRCs. (Reuters)
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