China Smelter Overbuilds, Record Commodity Pricing Squeeze Copper Markets

---

Written by Paul Wiseman for IIR News Intelligence (Sugar Land, Texas)

---

Summary

Copper hits record highs, but China's massive overbuilding plunges smelter revenues to record low. World supply shortage seen by 2035.

---

Copper Tops Prices

With all the interest in lithium and rare earths involved in data centers and electrification of travel and industry, the elephant in the room often is ignored: copper. It is ubiquitous in both wiring and in cooling. Skyrocketing demand, diminished new reserves, and aggressive practices by China have stretched the copper industry in opposite directions, says a new report by the International Energy Agency (IEA).

Recent copper price records of US$14,500 per tonne (briefly, intraday) in January followed the metal's previous record high of $12,000 per tonne in December. In its March 2 report entitled, "Copper prices have hit record highs, but smelters face mounting strategic pressures" the IEA said pricing was pushed up by supply shortages caused by major mine disruptions and by the U.S. building up copper inventories related to tariff questions.

Mine, Baby, Mine?

Additional mining could help, but the IEA notes significant challenges in opening new copper mines. On the demand side, U.S. stockpiling, record demand from data centers, a softer U.S. dollar, lower interest rates, investor shifts to physical assets, and financial speculation are pushing prices up.

Read more about data center demand and other copper issues in this February 20, 2026 Industrial Info story, "How Will Tight Copper Market Affect Data Center Growth?".

Peak Copper?

Among the challenges involving new mines, the poor quality of remaining ore deposits tops the list, says the IEA. "The average global grade of copper mines has decreased 40% since 1991," it says. Higher capital costs and increasing project complexity are other causes.

Expanding brownfield mines isn't much better, as average costs for that have risen 65% in just six years (since 2020), making this only slightly less costly than starting new.

And assuming a new mine is started, lead times for new copper projects involve about 17 years from discovery to production. Many existing projects have recently experienced major delays and cost overruns.

Taking measures on both the supply and demand side will be necessary, it said, for national security around the globe.

In short, rising demand and falling supply could lead to a worldwide copper shortage by 2035.

Smelters Need Shelter

While supply prices are skyrocketing, smelters are suffering from extremely low--and even negative--processing prices due to a glut of new builds.

The annual benchmark for copper treatment and refining charges (TC/RCs), by which smelters make their income, bottomed out at a record U.S.$0 per tonne in January. The benchmark is based on an agreement between Chilean miner Antofagasta and some of the larger Chinese smelters. Spot TC/RC prices have actually been negative since 2024.

China Grows

A glut in building of new smelters is the main reason the IEA sees for these record lows. They point out that Chinese smelter growth "has significantly outstripped growth in copper concentrate production."

It continues, "Since 2005, China has accounted for over 90% of growth in global copper smelter output, lifting its share from around 15% to half of global supply in 2025."

Staying Alive with Byproducts

The saving grace for smelters relies on other minerals in copper ore. That includes gold, silver, and sulphuric acid--all of which have seen record prices in recent months. As a result, smelters with access to byproduct-rich concentrates and have the equipment to recover these substances "are still generating robust profits, offsetting losses from low TC/RCs."

Smelters are also benefitting from record high premiums for refined copper products, at least for now.

Some Are in Trouble

However, many smelters are not equipped or supplied in ways that enable them to profit from byproducts. For some, the IEA said, government subsidies or production cuts have been necessary. Others are turning to copper recycling, but even with these measures their long-term survival in the conditions is in doubt.

Chinese Smelters Are Not in Trouble

Lower labor and construction costs, economies of scale, greater efficiency of new smelters, and government support (being state-owned) during down times all combine to boost Chinese smelter options.

Some operate on goals based on physical output instead of economics, which generally immunizes them against economic issues.

Key Takeaways

• Buildouts of data centers and other electrification projects are significantly raising copper demand and contributing to record commodity prices.
• Chinese overbuilding of smelters is depressing smelter prices. Only those who can process and market byproducts like gold and sulfur are doing well, for now

---

About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).