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Chinese copper smelters are likely to accept a fixed negative price in next year’s term contracts for the first time but resist a move towards spot pricing, according to an industry poll by Reuters, as a years-long shortage of concentrate challenges the relevance of the decades-long benchmark.
Biannual negotiations over processing fees, also known as copper concentrate treatment and refining charges (TC/RCs), between China’s smelters and miners, have served as a benchmark for the Asian copper trade for decades. In recent years, the miner at the table has been Chilean miner Antofagasta (LON: ANTO).
But that benchmark has become increasingly detached from reality, as growing quantities of ore now change hands in the spot market where negative prices have been the norm since early 2025 because of acute shortages of concentrate.
TC/RCs were traditionally paid by miners to smelters for turning concentrate into refined metal, representing a key source of revenue for smelters. Negative prices mean smelters have to pay miners instead.
Chinese smelters, supported by their state-backed industry association, have resisted negative term prices, but in doing so challenged the relevance of a benchmark for pricing that is wildly at odds with spot prices.
“2027 could be a year in which the benchmark survives as a reference point but becomes less representative of where the wider market actually trades,” said Raghav Jain, head of copper pricing at information provider Argus.
As the industry gathers in Shanghai next week for the World Copper Conference Asia, many industry participants expect a negative fixed price to be reached.
In a Reuters poll of 35 smelters, miners, traders and analysts, 21 expect a negative fixed price, with forecasts from minus $50 to minus $150 per metric ton. Only seven thought the system would be dismantled and replaced by spot pricing. Another seven could not decide.
Should a deal be struck at that price range, there would still be a big gap with spot prices, which fell again to minus $247.20 a ton on November 6. As a result, three of the 21 respondents expect a continuation of the trend where fewer cargoes are traded at benchmark prices.
This trend is underpinned by a structural shortage of copper concentrate due to disruptions to mine supply colliding with the expansion of smelting capacity, especially in China.
The challenge to benchmark pricing from spot markets is not new. Iron ore moved to spot pricing in 2010, and Glencore CEO Gary Nagle said in October the dynamic now playing out in copper is present in many other commodities as spot markets take a larger role.
“The chrome benchmark has fallen away. The Newcastle coal benchmark is virtually non-existent anymore,” Nagle said during an earnings call. “Within a market which trades more and more on the spot market, and is more volatile, it makes sense to actually trade these things more in the spot market than have these long-term benchmarks.”
(Reporting by Amy Lv, Dylan Duan in Shanghai, and Tom Daly in London; Additional reporting by Melanie Burton in Melbourne; Editing by Lewis Jackson and DJ Yap)
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