On April 24, the SMM Imported Copper Concentrate Index (weekly) stood at -81.44 USD/dmt, down 2.83 USD/dmt from the previous reading of -78.61 USD/dmt. The deeply negative TC reflects the tightness in the global copper concentrate market, which has already shifted from market expectations to an actual rigid contraction in supply. In the first quarter of 2026, the world's leading mining companies frequently revised down their production guidance, with supply-side disruptions far exceeding early-year forecasts. Freeport significantly lowered its full-year 2026 copper production forecast from 1.542 million tonnes to approximately 1.406 million tonnes, with an expected recovery rate of only 65%, due to slower-than-expected mine recovery at its Grasberg site in Indonesia, affected by mudslides and ore moisture. In addition, road blockades caused by strikes at BHP's Escondida and Zaldivar mines have led to actual production impacts that remain to be monitored. According to SMM exclusive data, the global copper concentrate deficit in 2026 is estimated at 317,000 metal tonnes, a situation that may ease somewhat in 2029. In stark contrast to the persistently falling TC, domestic smelter operating rates remained high in Q1 2026. According to SMM data, China's electrolytic copper output in March 2026 reached 1.2061 million tonnes, up 5.58% month-on-month and 7.49% year-on-year. In Q1 2026, total electrolytic copper output was 3.5278 million tonnes, up 4.60% quarter-on-quarter and 10.45% year-on-year. SMM survey data shows that 11 smelters have confirmed maintenance schedules for Q2 2026. This means that domestic electrolytic copper output is expected to decline in Q2, with spot supplies likely tightening temporarily in May and June. However, some smelters have reported that due to high sulfuric acid prices, maintenance completion times may be brought forward. Sulfuric acid is currently the most important by-product revenue source for the copper smelting industry. According to SMM data, on April 24, 2026, China's copper smelting acid index stood at 1,660.5 RMB/ton, up 31.5 RMB/ton from the previous period. As sulfuric acid revenues have risen steadily from 890 RMB/ton at the start of 2026 to 1,660.5 RMB/ton in April 2026, based on the co-production of 3–4.5 tonnes of sulfuric acid per tonne of electrolytic copper, sulfuric acid income can now cover the copper concentrate procurement cost and part of the processing cost for smelters. The upward slope and magnitude of this increase exceed the deterioration in spot TC. The substantial boost in sulfuric acid profitability allows smelters to tolerate lower TC, creating a cycle of "higher sulfuric acid prices, lower TC." Meanwhile, rising gold and silver prices have further expanded smelters' comprehensive profit margins. Although the copper smelting segment is deeply loss-making, driven by the hefty profits from sulfuric acid, gold, and silver, domestic copper smelters have been able to maintain high operating rates without large-scale production cuts caused by deeply negative TC. Additionally, about 20% of the world's electrolytic copper comes from hydrometallurgical processes, with the DRC and Chile together accounting for nearly 80% of that. Hydrometallurgical copper production consumes large amounts of sulfuric acid, and sulfur is a key raw material for sulfuric acid. The current disruption in the Strait of Hormuz has cut off approximately 50–60% of Middle Eastern sulfur shipments by sea, pushing up sulfur and sulfuric acid prices. Worth noting is that as late April 2026 progresses, sulfuric acid export restrictions combined with increased domestic production have shown signs of price softening. If sulfuric acid prices continue to decline, it will directly squeeze the comprehensive profit margins of domestic smelters. At that point, the dual pressure of persistently low TC and falling sulfuric acid prices could trigger real production cuts on the smelting side. Although gold and silver prices do not directly determine TC trends, their macro-pricing logic as part of the non-ferrous metals sector is worth attention. The market has largely priced in the expectation that the Federal Reserve will not cut interest rates at all in 2026, with the first rate cut possibly delayed until July 2027. For copper, a delayed rate cut means no near-term easing of macro liquidity, but copper's core pricing logic remains the ongoing tug-of-war between tightening supply on the mining side and rigid demand. In other words, precious metals are under pressure, but industrial metals' pricing center remains in real supply-demand fundamentals, which explains why weaker gold and silver prices have not dragged copper prices lower. According to SMM, for Chinese smelters, domestic copper concentrate spot TC transactions are feasible in the range of -81 USD/dmt to -88 USD/dmt. Some holders have attempted to offer TC at -100 USD/dmt, while some smelters are willing to accept deliveries at the lower end around -90 USD/dmt. The downward trend in TC has not yet stopped, and smelter purchasing activity may have weakened slightly, but not significantly. Key areas to watch moving forward: Sulfuric acid side: The price trend will depend on the interplay of multiple factors. First, China's sulfuric acid export policy direction: if export restrictions continue, domestic sulfuric acid supply will be relatively abundant, and prices may fall from highs; if exports are temporarily allowed, overseas hydrometallurgical copper supply risks will rise, but domestic sulfuric acid prices may find support. Second, the recovery of sulfur supply: when shipping through the Strait of Hormuz returns to normal will directly affect the pace at which Middle Eastern sulfur can supplement global markets. Third, seasonal demand changes for downstream products such as phosphate fertilizers will also cause periodic price volatility for sulfuric acid. Mining side: Focus on the progress of the Grasberg conversion project, labor negotiation results at Chilean mines, and logistics stability at mines such as Las Bambas in Peru. Any new supply release will effectively ease TC pressure. Macro side: Monitor the Federal Reserve's monetary policy path, the U.S. dollar index, the actual driving effect of China's pro-growth policies on copper consumption, and whether the growth rate of copper demand in global new energy sectors is slowing marginally.

First, multi-material indexation has become normal practice in domestic cell pricing. However, passing these costs through to project owners is far from smooth. Second, the adjustment cycle in overseas markets is shortening. Yet even a lithium-carbonate-only linkage faces resistance at the owner level. Third, cost pressure is concentrating heavily at the integration stage.

On March 23, the 150,000-ton annual electrolytic copper project undertaken by the Second Company of China No.15 Metallurgical Construction Group Co., Ltd. for Jiangxi Copper Hongyuan Copper Industry Co., Ltd. successfully produced a cumulative total of 1,300 tons of high-purity cathode copper, with product purity reaching 99.997%, exceeding the design value of 99.9935%.

As of March 9, SMM recorded total social inventory of copper cathode in major regions of China at 578,900 mt, up 1,700 mt from last week and up 70,400 mt from February 24, reaching a historical high. Over the same period, spot premiums for SMM #1 copper cathode gradually recovered from premium -260 yuan/mt on February 27 to parity on March 10. Overall, this upswing in spot premiums was mainly driven by the approach of delivery, under which the contango price spread between nearby and next-month contracts stayed around 300 yuan/mt; suppliers held prices firm and withheld sales, while about half of the material was converted into warrants and locked in, jointly tightening circulating supply. Observing the inventory accumulation pace, from the week of March 2 to March 9, inventories in three key regions increased by 14,400 tons, a growth of 2.65%. This marks a significant slowdown compared to the average weekly increase of approximately 45,000 tons during the period from February 5 to February 26. The deceleration in inventory buildup provided room for improvement in premiums. Current inventory accumulation primarily stems from two factors: First, the continued arrival of imported copper. According to SMM research, a substantial volume of imported copper continues to arrive recently, and it is expected that arrivals will not see a significant decline in March. The steady inflow of imported materials provides a continuous supply supplement to the domestic market and is a crucial support for maintaining high total inventory levels. The actual situation of imported arrivals in April remains to be confirmed, requiring close attention to customs data at month-end and changes in port clearance pace. Second, some cargoes are being delivered into bonded/warehouse warrant stocks. According to the electrolytic copper spot purchasing and selling sentiment indices for the Shanghai region recorded by SMM, the purchasing sentiment index rose from 2.08 on February 24 to 2.78 on March 10, while the selling sentiment index increased from 2.09 to 2.90 over the same period. Some downstream players have limited acceptance of current copper prices, maintaining a procurement strategy focused on immediate needs, resulting in selling sentiment slightly outpacing purchasing sentiment. Based on SMM's communications with enterprises: Upstream Producer 1: Recent consumption is relatively good, with daily sales around 2,000 tons. Upstream Producer 2: Currently produced electrolytic copper is primarily for export. Domestic inventories are low, so there's no rush to sell. Unwilling to sell when discounts are excessive. Trader 1: Quotations in the Changzhou market are higher than in Shanghai, mainly because locally available circulating cargoes are mostly warrants. Under the current spread structure, holders have high flexibility in selling – they can choose to sell or hold. Trader 2: The market is not short of supply; there are still a large number of warrants in warehouses awaiting digestion. However, due to the delivery mechanism, the incentive to sell depends on the premium level. Only when the premium exceeds the cost of capital will there be a strong willingness to liquidate. Downstream User 1: Recent orders are relatively robust. When copper prices fell on March 9, we already replenished inventories at the low point. Current raw material inventory can sustain operations until March 15. There are no immediate plans for further procurement; subsequent needs will primarily be met through long-term contract drawdowns. Downstream User 2: The recent spot premium has been quite firm, mainly due to the spread between months. Without such a high monthly spread, the premium would definitely not reach this level. In summary, this round of recovery in spot premiums is driven by multiple factors: First, the approach of delivery and the widening monthly spread strengthened holders' willingness to support prices. With delivery approaching, the Contango spread between months remains around 300 yuan/ton. Holders are underpinning prices, reluctant to sell, and strongly inclined to deliver stocks into warrants. Second, the inventory structure further amplified the tightness of available circulating supply. Taking Jiangsu as an example, out of 118,000 tons of social inventory, 94,000 tons were futures warrants. This portion is locked in delivery warehouses, making it difficult to form effective supply in the short term, leading to a phase of relative tightness in spot market circulating cargoes. According to SMM, some downstream companies in Jiangsu struggled to source materials in the market and opted to procure using the SMM Flat Copper Price average as a benchmark with minor adjustments. Third, the comprehensive resumption of work by downstream enterprises released procurement demand. After the Lantern Festival, downstream processing enterprises in Jiangsu, Zhejiang, and Shanghai entered a full resumption phase. Surveys indicate that companies in the battery materials sector maintain high operating rates. Copper foil processors reported that downstream battery manufacturers sustain high operating rates, with March production schedules already showing characteristics of the peak season. Copper tube companies, supported by peak season stocking from the air conditioning industry, have operating rates exceeding pre-holiday levels. Although the recovery pace in the wire & cable and copper rod sectors is relatively slow, overall procurement demand has significantly improved compared to the first week after the holiday. Fourth, the decline in copper prices activated downstream restocking intentions. Recently, Shanghai copper futures prices retreated somewhat, stimulating downstream enterprises to purchase at dips. Previously suppressed by high copper prices, downstream players mostly maintained a cautious just-in-time procurement strategy, resulting in generally low raw material inventory levels. After the price pullback, some companies took the opportunity to replenish stocks, boosting spot transaction activity.

SMM March 2 Update: Today, in Guangdong, #1 copper cathode spot prices against the front-month contract: high-quality copper was quoted at a discount of 50 yuan/mt, down 20 yuan/mt; standard-quality copper was quoted at a discount of 280 yuan/mt, down 50 yuan/mt; SX-EW copper was quoted at a discount of 340 yuan/mt, down 50 yuan/mt. The average price of #1 copper cathode in Guangdong was 102,290 yuan/mt, up 335 yuan/mt from the previous trading day, while the average price of SX-EW copper was 102,115 yuan/mt, down 50 yuan/mt from the previous trading day. Spot market: Inventory in Guangdong has increased for six consecutive days, mainly due to slow recovery in downstream consumption. With rising inventory and rebounding copper prices, downstream buyers were not active, and suppliers had to lower premiums to ship goods, resulting in moderate overall trading. Today, the purchasing sentiment for electrolytic copper in the Guangdong region was 2.4, down 0.1 from the previous trading day, and the shipping sentiment was 3.1, up 0.1 from the previous trading day. (Historical data can be accessed by logging into the database.) Overall, with rising inventory and rebounding copper prices, downstream buyers were not active, and overall trading was moderate.

SMM Morning Meeting Minutes: LME copper opened at $13,317/mt overnight, fluctuated rangebound after opening, then touched a low of $13,168/mt, and subsequently the center rose to touch a high of $13,348/mt, finally closing at $13,259/mt, down 0.68%. Trading volume reached 18,000 lots, a decrease of 809 lots from the previous trading day; open interest reached 316,000 lots, a decrease of 4,795 lots from the previous trading day, overall mainly showing bulls reducing positions. The most-traded SHFE copper contract opened at 102,670 yuan/mt overnight, fluctuated downward after opening, then touched a low of 101,780 yuan/mt, and subsequently the center rose to touch a high of 102,880 yuan/mt, finally closing at 102,550 yuan/mt, down 0.15%. Trading volume reached 55,000 lots, a decrease of 51,000 lots from the previous trading day; open interest reached 186,000 lots, an increase of 1,437 lots from the previous trading day, overall mainly showing bears increasing positions.