China 2025 copper output set to hit record high despite feedstock shortages

China's refined copper output is projected to reach a record high in 2025, increasing 7.5%-12% this year, despite a global shortage of copper concentrate and low processing fees that are forcing overseas competitors to pause production. This robust growth, fueled by strong domestic demand from exports and power grid investment, solidifies China's dominance, pushing its share of global refined copper production to 57% and is expected to reduce its refined copper imports. While recent US tariffs on copper products were less severe than anticipated, they are unlikely to significantly impact China's output or demand.

Analysis

China's refined copper production is on track for a record high in 2025, with analysts projecting a 7.5% to 12% increase this year, solidifying its control over the global market. This expansion occurs amid a severe global shortage of copper concentrate, which has driven processing fees to record lows and pressured international competitors. Notably, Glencore has placed its Philippine smelter on maintenance and Sinomine has paused its Namibian plant, citing these challenging conditions. China has sustained its output growth by aggressively increasing concentrate imports—up 6.4% in the first half of the year, far outpacing the sub-1% growth in global ore supply—and by utilizing domestic scrap and inventories. This robust production is supported by strong domestic demand, leading firms like Macquarie and Benchmark Mineral Intelligence (BMI) to upgrade their China copper demand growth forecasts to 4.2% and 3.8% respectively. Consequently, China's share of global refined output is expected to reach 57% this year, likely reducing its refined copper imports, which are already down 8.6% in the first half. The recently imposed U.S. tariffs are considered too narrow to significantly impact this trajectory, while benchmark copper prices remain firm, up 8.8% year-to-date, reflecting underlying market tightness.

Key Decisions for Investors

• Investors should exercise caution with non-Chinese copper smelters, such as Glencore (GLNCY), which face significant margin pressure and operational halts due to the global concentrate shortage exacerbated by China's market dominance.
• The resilience of copper prices, up 8.8% year-to-date amidst upward revisions in China's demand forecasts, supports a constructive view on the commodity itself and potentially benefits upstream mining companies with secure concentrate supply.
• Monitor treatment and refining charges (TC/RCs) for signs of further margin compression on smelters, and track China's refined copper import data, as a sustained decline could indicate growing self-sufficiency and alter global trade flows.
• The weaker-than-expected U.S. tariffs on Chinese copper products have removed a significant near-term risk, potentially stabilizing the outlook for Chinese copper exporters and related supply chains.