SMM, July 12: In the first half of 2026, China's aluminum extrusion industry presented an extreme pattern of structural divergence. Traditional construction extrusion demand remained persistently weak, dragging down the industry’s overall operating load, while industrial extrusion maintained high prosperity, underpinned by new energy, power, and heat dissipation sectors, serving as the core pillar of the industry. Meanwhile, linked volatility in aluminum prices intensified both in and outside China, with the price spread repeatedly narrowing. The export market experienced a "deep V-shaped recovery" trajectory, and the overall industry performance was characterized by "weak recovery in domestic demand, initial suppression followed by recovery in overseas demand, and a stark contrast between strong and weak structural segments." 1. Extrusion Operating Rates: Construction Extrusion Continued to Drag, Industrial Extrusion Resilience Supported the Industry After the 2026 Chinese New Year, the industry entered its traditional peak season for resuming work. In March, extrusion enterprises concentrated on production resumptions and downstream clients engaged in concentrated restocking, pushing the industry's composite operating rate to its H1 peak of 50.6%. Entering Q2, genuine downstream demand follow-through was insufficient, raw material prices fluctuated at high levels, and the industry was further impacted by the rainy season in south China and environmental protection inspections in some regions. As a result, the industry operating rate continued to pull back mildly, falling to 47.6% in June, with the overall operating level weaker than the average for the same period over the past three years. Construction extrusion was the core weak spot dragging down the industry’s overall operations. In H1, data on commercial housing transactions and new construction starts in China remained persistently weak; developers' financial positions showed no significant improvement, and payment returns from project sites were slow. Orders for housing construction-related doors, windows, and curtain wall extrusions continued to shrink. From January to May, domestic aluminum prices generally consolidated at highs, and downstream end-users exhibited strong resistance to high-priced raw materials. Traders and processing plants generally maintained low inventory levels, moving goods in and out quickly, with low willingness to initiate restocking. Although the industry actively expanded non-residential construction demand from industrial parks, standard factories, and government and enterprise public buildings, and home decoration for existing home renovations and home decoration retail recovered slightly, the incremental volume was limited, completely failing to offset the decline in bulk project orders. In H1, construction extrusion operations remained under pressure, making it the biggest drag on the industry. The structural prosperity of the industrial extrusion segment continued to rise, strongly underpinning the industry's operating rates. Demand for power transmission and transformation, energy storage structural components, industrial heat dissipation extrusions, and rail transit supporting profiles maintained steady growth. For PV extrusion, affected by the official cancellation of the export tax rebate policy for PV-related products on April 1, overseas clients concentrated on front-loading orders and enterprises rushed to meet production deadlines in Q1, driving the operating rates for PV frames and mounting extrusions to stage a temporary surge. After the policy took effect, the bonus from overseas rush orders faded, and PV extrusion production schedules returned to rationality, maintaining stable operation from April to June. NEV extrusions showed structural divergence: demand for lightweight extrusions for auto body and chassis remained robust, while demand for ordinary interior extrusions weakened. Overall, the resonance of prosperity across multiple industrial extrusion tracks effectively offset the weak demand for traditional construction materials, highlighting the structural resilience of the industry. 2. Aluminum Extrusion Exports: Deeply Under Pressure in Q1, Continuous Recovery in Q2, V-Shaped Reversal in H1 In H1 2026, China's aluminum extrusion exports followed a V-shaped trend overall, with a sharp decline in Q1 followed by consecutive recoveries in Q2. The driving logic shifted from price inversions and off-season effects overseas at the beginning of the year, towards the release of demand in emerging markets and the transfer of China's processing and manufacturing advantages. Q1: Domestic and Overseas Aluminum Price Inversions Combined with Overseas Off-Season Led to Sharply Weaker Exports Exports from January to February showed off-season resilience, mainly supported by deliveries for orders placed ahead of the Chinese New Year. In January, China exported 81,000 mt of aluminum extrusions, up slightly by 1.4% MoM but down slightly by 5.3% YoY. In February, disruptions from the Chinese New Year holiday saw exports fall to 64,000 mt, a 20.4% MoM decrease but a sharp 62% YoY increase, significantly outperforming the precipitous declines of past Chinese New Year periods. The core reason was that secondary aluminum extrusion enterprises in Guangdong and Fujian concentrated on delivering orders for Southeast Asia and the Middle East before the holiday, while some industrial extrusion enterprises adopted a model of "preliminary domestic processing and deep processing overseas" to speed up contract fulfillment, supporting export volumes at the start of the year. In March, industry exports hit their low point for the first half of the year, with monthly exports of only 48,000 mt, down 24.8% MoM and plunging 32.8% YoY. The core reason for this export slump was not a single geopolitical factor but the resonance of multiple negative factors: first, orders placed ahead of the Chinese New Year overdrew demand from February and March, after which overseas markets entered the traditional consumption off-season; second, LME aluminum saw wild swings in March, and domestic and overseas aluminum prices quickly inverted, compressing export profits for domestic extrusions and leading enterprises to proactively control volumes and take fewer orders; third, the European and US CBAM carbon tariff continued to suppress high-end extrusion exports, causing continuous market shrinkage there, coupled with a slowdown in logistics and customs clearance in some Middle Eastern regions. These multiple factors caused a substantial pullback in export volumes in March. Q2: Emerging Market Volume Surge, Exports See Double YoY and MoM Growth for Two Consecutive Months Starting in April, the price spread between China and overseas markets gradually recovered, the overseas off-season ended, and industry exports began a continuous recovery channel. Exports that month were 76,000 mt, surging 56.8% MoM and up 6.9% YoY, returning to the normal range for past years. Trade and logistics order in the Middle East recovered, stockpiling in Southeast Asia ahead of the rainy season began, and domestic enterprises accelerated their layout in emerging markets in Central Asia and Latin America. Leveraging overseas affiliated warehouses and cross-border stockpiling models to continuously take on rigid demand orders for overseas doors, windows, and curtain walls, export prosperity recovered rapidly. Exports in May continued their high-growth momentum, hitting the monthly peak for H1 at 87,000 mt, up 14.6% MoM and 20.1% YoY. The export structure continued to optimize; low-end construction extrusions saw steady incremental growth, while the export share of high-value-added industrial aluminum components, outdoor aluminum semis, and PV supporting extrusions continued to rise. Southeast Asia, Australia, South America, and Central Asia became the four core growth markets for domestic extrusion exports, effectively offsetting the shrinking demand in European and US markets. 3. H2 2026 Industry Outlook: Weakly Stable Domestic Demand, Marginal Export Weakness, Continued Structural Divergence Looking ahead to H2 2026, the structural divergence pattern in China's aluminum extrusion industry is expected to become further entrenched, with overall operations characterized by "consolidation on a subdued note, industrial support, and construction material drag." On the domestic demand side, the fundamentals of the real estate sector are hard-pressed to see a substantive repair in the short term. Commercial housing new starts and project payment returns are expected to remain weak, and construction extrusion demand will continue to operate in a low range without a trending recovery. Non-residential infrastructure and home decoration retail can only provide a slight offset, unable to reverse the overall weakness of construction extrusions. Industrial extrusion will remain the core pillar of the industry: in H2, steady climbing of domestic PV installations will drive the continued release of demand for PV frames and mounting extrusions; demand for new-type energy storage, data center heat dissipation, and power equipment extrusions will maintain steady incremental growth. NEV extrusions will show a divergence between strong and weak segments; demand for high-end lightweight structural components will be firm, but overall industry overcapacity and intensifying end-user competition will exert marginal contraction pressure on demand for ordinary automotive extrusions. Overall, industrial extrusion can defend the industry’s baseline but can hardly offset the downward pressure from construction extrusions. In H2, the industry's overall operating rate may be slightly lower than in H1. Pressure on the export front will gradually emerge, with the trend potentially turning from the high growth of Q2 to a mild slowdown. In H2, the bonus from overseas traditional peak seasons will gradually fade, while the domestic-overseas aluminum price spread narrows, export processing profits are compressed, and overseas local aluminum processing capacity continues to be released, alongside persistent trade barriers against Chinese aluminum semis in some countries. This will gradually weaken the price advantage of domestic extrusion exports. Although secondary aluminum extrusion exports may still hold cost advantages, homogenized competition in low-end products is fierce and profits remain compressed. The export growth rate for aluminum extrusions is expected to slow down gradually in H2, with overall volumes weaker than in Q2. In summary, throughout 2026, the aluminum extrusion industry is expected to continuously exhibit structural characteristics of weak construction, strong industrial, stable but weak domestic demand, and exports that are high in the first half and low in the second. Industry competition will further concentrate on high-end industrial extrusion, high-value-added deep processing, and overseas emerging markets, with low-end construction extrusion capacity continuously entering a phase of being cleared.

SMM July 10: Futures markets surged again today, intensifying pressure on spot aluminum in South China. As the weekend approached, higher absolute prices spurred outright holders to increase shipments and monetize, with many downward adjustments causing significant impact; hedged cargo intended to hold prices firm but was dragged down and passively followed suit, with mainstream quotations a discount of 20-10 yuan/mt, supply appearing even more abundant, and in fact, no shortage of even cheaper cargo. On the demand side, downstream buyers’ purchasing appetite was mediocre given the high prices, only pushing for lower prices and buying the bare minimum; traders remained on the sidelines, largely unwilling to enter the market to purchase. Overall demand was at a relative trough, resulting in dismal overall trading. Spot transaction prices were concentrated at a premium of 10-50 yuan/mt against the SHFE aluminum 2607 contract.

SMM, July 10: This week, cobalt market product prices continued to consolidate on a weak note. Although refined cobalt prices edged up by 2,000 yuan/mt, end-use demand showed no substantial improvement, and the recovery of downstream demand remains the eagerly anticipated future for the entire cobalt industry chain. Looking back at refined cobalt prices in H1 2026, despite the drag from weak downstream demand performance, the overall price center still rose significantly compared with the same period in 2025, with a YoY surge of as much as 97.22%........ SMM has compiled the price changes of cobalt series products this week and the price review of the cobalt market in H1, as follows: : According to SMM spot price data, refined cobalt spot prices edged up this week. As of July 10, spot refined cobalt prices rose to 380,000-387,000 yuan/mt, with an average price of 383,500 yuan/mt, up by 2,000 yuan/mt from 381,500 yuan/mt on July 3, an increase of 0.52%. 》View SMM cobalt and lithium spot prices Supply side, mainstream smelters slightly raised EXW prices to 390,000 yuan/mt; trader spot-futures price spreads remained in the range of parity to a premium of 10,000 yuan/mt. Demand side, downstream changes were not significant this week, with most enterprises maintaining restocking for rigid demand, and end-use demand had not yet shown substantial improvement. In the short term, with relatively weak downstream support and high industry inventory, refined cobalt prices are likely to mainly consolidate; however, for refined cobalt prices to enter a recovery path, they still depend on the upward momentum of upstream categories such as cobalt intermediate products and cobalt sulphate. Cobalt Salt ( and ): : According to SMM spot price data, cobalt sulphate spot prices remained in the doldrums this week. As of July 10, spot cobalt sulphate prices fell to 84,200-86,000 yuan/mt, with an average price of 85,100 yuan/mt, down by 900 yuan/mt from July 3, a drop of 1.05%. 》View SMM cobalt and lithium spot prices According to SMM, trading in the cobalt sulphate market remained sluggish this week, and prices returned to a weak, grinding lower trend. Supply side, quotations from primary smelters remained firm, with mainstream enterprises continuing to hold the 85,000 yuan/mt level; however, some recycled-material smelters lowered their offers again to promote shipments, and the lowest offer in the market has now fallen back to 80,000-81,000 yuan/mt. Demand side showed no significant improvement, downstream enterprises mostly scheduled production pace based on orders, and product settlements generally referenced monthly average prices. To avoid risks from spot purchase-sales price spreads, most enterprises mainly adopted a wait-and-see approach at the beginning of the month, and restocking activities will likely take place after mid-to-late July, or possibly be postponed to August. Recently, a few companies had low inventory and intended to restock, but their psychological price level was below 80,000 yuan/mt, limiting actual completion. In the short term, the cobalt sulphate price is expected to consolidate on a subdued note, and sustained recovery in the market will depend on the realization of downstream concentrated restocking demand. side: According to SMM spot price data, spot cobalt chloride quotations edged down 250 yuan/mt early in the week and then held steady. As of July 10, spot cobalt chloride was quoted steady at 102,000–104,000 yuan/mt, averaging 103,000 yuan/mt, down 0.24% from July 3. In the spot market, according to SMM, the cobalt chloride market remained sluggish this week. Inquiry activity improved slightly from the prior period, but actual concluded deals were still very limited. On the supply side, smelter quotations were broadly stable, but with no sizeable transactions, current offer prices mainly reflected seller sentiment, and their actual reference value remained to be verified. On the demand side, the “rush to buy amid continuous price rise and hold back amid price downturn” mentality continued to dominate. Downstream buyers were still assessing whether the current price plateau was a brief pause or a stage bottom, and their willingness to enter the market was low, with an overall wait-and-see sentiment remaining strong. In the short term, cobalt chloride prices are likely to move sideways, with limited downside room. side: According to SMM spot price data, spot Co3O4 quotations also stabilized temporarily after a decline on the first trading day this week. As of July 10, spot Co3O4 was quoted steady at 310,000–330,000 yuan/mt, averaging 320,000 yuan/mt, down 2,500 yuan/mt or 0.78% from July 3. From the spot market perspective, the Co3O4 market continued to be sluggish this week, and actual deals remained scarce. On the supply side, after the half-year mark, previously bearish enterprises had largely completed destocking, easing the pressure from concentrated sell-offs, and quotations stabilized. On the demand side, although downstream cathode material plants had a procurement window, during the period of continued price consolidation at lows, they were still mainly pressing for lower prices and restocking only small volumes on demand, with little willingness to increase purchases. The sluggish market continued to weigh on upstream shipment pace. In the short term, the Co3O4 price trend will remain anchored to the cobalt salt segment price direction and is expected to mainly move sideways in line with cobalt chloride. On the news front, the first half of 2026 has concluded. Reviewing the cobalt market performance in H1, although refined cobalt prices were dragged down by weak downstream demand, due to the impact of a series of measures such as the DRC's cobalt export ban previously, refined cobalt prices overall remained fluctuating at relatively high levels over the past three years. According to SMM historical prices, in H1 2026, the average spot price of refined cobalt was 424,325.43 yuan/mt, up by 209,170.73 yuan/mt or 97.22% from 215,154.7 yuan/mt in H1 2025. On a monthly basis: In January 2026, affected by profit-taking, weakening macro sentiment, and the drag from declining other metals, refined cobalt prices retreated after a rapid rise and then stabilized at relatively low levels for a long period. Supported by strong raw material costs, other cobalt products, while not declining in price, lacked upward momentum and entered a stable state. During the Chinese New Year period, affected by various bullish news, refined cobalt prices briefly rebounded; however, subsequently, under the influence of domestic and international arbitrage, low downstream stockpiling demand, and capital suppression, prices continued to grind lower, returning to low levels. End-users operated with low inventories, making just-in-time procurement only. The cobalt salt market remained divided, with upstream holders expecting price rises and unwilling to sell at lower prices, while only enterprises under capital pressure cut prices to sell. Downstream buyers were unwilling to purchase at high prices without orders, leaving the market sluggish. Prices overall remained stable. From April to May, downstream production schedules and orders fell short of market expectations. Coupled with most enterprises having relatively ample raw material inventories, purchase willingness was weak, with only small-volume procurement of low-priced raw materials. On the supply side, although the vast majority of smelters held prices firm due to high raw material cost support, some recycling smelters and traders, under capital pressure, sold at discounts, causing prices to slowly grind lower overall. Entering June 2026, the cobalt market continued to grind lower, with the price centers of various products moving further down. End-use demand for refined cobalt remained weak, and combined with some enterprises facing capital and financial report pressures, they continued to sell off in spot and futures markets, putting prices under pressure. The cobalt salt segment was affected by weakening production schedules for downstream ternary cathode precursors and Co3O4, with procurement remaining just-in-time and pushing for lower prices, causing transaction centers to continue declining. Cobalt intermediate products edged lower in the tug-of-war between miners holding prices firm and domestic smelters' subdued purchases, with a smaller decline than cobalt salts, further compressing smelting margins. Overall, the strategic supply-demand stalemate persisted: upstream cost support clashed with downstream pressure for lower prices, and some enterprises, pressured by mid-year financial reports and capital, cut prices to sell, further dragging down the market. Looking ahead to July, in the short term, downstream demand is expected to remain weak, and the high inventories still present in the market will constrain price increases. Prices may consolidate at low levels, with some speculative traders possibly selling off and exiting due to low prices. However, if other cobalt products rise, refined cobalt prices could also follow suit and increase. For more insights into the cobalt market, check out the , released by SMM in the first ten days of each month. SMM will also publish a review of the 2026 H1 cobalt market and an outlook for H2—stay tuned!

[SMM Analysis: H1 2026 Secondary Copper Rod Market Semi-Annual Report: Compliance Reshapes Pricing Logic, Supply-Demand Standoff Throughout] In H1 2026, the secondary copper rod market completely broke away from the traditional pricing framework of "copper prices – supply and demand." It was primarily impacted by the dual policy shocks of "reverse invoicing" moving from transitional verification to full implementation and the clearance of local irregular fiscal and tax incentives (Document No. 770), coupled with wide fluctuations as the most-traded SHFE copper contract retreated from the record high of 113,800 yuan/mt at the start of the year and consistently held the threshold of 100,000 yuan/mt in mid-year. The entire industry found itself in a deep stalemate characterized by "policies setting the structure, invoices locking in transactions, and copper prices setting the pace," with the operating rate plunging sharply YoY, and enterprises generally walking a tightrope between compliance pressure and weak demand.....

The most significant change in the imported copper concentrate market in the first half of 2026 emerged during the mid-year term-contract negotiations. According to SMM, Antofagasta, a leading Chilean mining company, and several major Chinese smelters finalized the pricing mechanism for their mid-year copper concentrate term contracts on July 1. Rather than continuing with the traditional fixed-TC approach, the parties adopted an index-linked pricing mechanism.Chinese smelters had already agreed with Antofagasta on historically low term-contract treatment and refining charges of US$0 per dry metric tonne and US¢0 per pound in 2025. The further introduction of index-based pricing in the 2026 mid-year negotiations indicates that the pricing framework for imported copper concentrate term contracts is undergoing a structural transformation, against a backdrop of persistently and deeply negative spot TCs and steadily strengthening pricing power on the mine side. At a more fundamental level, the change in term-contract pricing reflects the persistent mismatch between mine-supply growth and the expansion of smelting demand. SMM estimates that global sulfide copper concentrate supply will increase by approximately 250,000 tonnes of contained copper in 2026 compared with 2025, representing growth of around 1.3%. By contrast, newly commissioned and expanded primary smelting capacity in China is expected to generate approximately 800,000 tonnes of additional concentrate demand on a contained-copper basis.The increase in mine supply is therefore significantly smaller than the expansion in smelter demand. Meanwhile, factors including the slower-than-expected restart of Grasberg, the continued absence of a full restart at Cobre Panamá, declining ore grades at mature Chilean mines, and the lingering effects of seismic activity at Kamoa-Kakula kept the imported copper concentrate spot market extremely tight throughout the first half of the year.SMM estimates that the global sulfide copper concentrate market will record a supply deficit of approximately 610,000 tonnes of contained copper in 2026. The shortage may not begin to ease until around 2029, when production from a number of new mine projects is expected to come on stream. At the same time, elevated sulfur and sulfuric acid prices have provided an important floor under copper smelter profitability and increased smelters’ ability to absorb deeply negative TCs, at least temporarily. On July 3, the SMM China Copper Smelter Sulfuric Acid Index stood at RMB 1,789 per tonne, up RMB 886 per tonne from RMB 903 per tonne on January 9. The rise in sulfuric acid prices since the beginning of 2026 has become an important earnings driver for Chinese copper smelters and has helped sustain high refined-copper output. Under the combined influence of the mine-smelter supply-demand mismatch and strong by-product margins, spot TCs for imported copper concentrate continued to fall during the first half of 2026. The monthly SMM Imported Copper Concentrate Index averaged negative US$121.44 per dry metric tonne in June, down US$18.31 per dry metric tonne from negative US$103.13 per dry metric tonne in May. On a weekly basis, the SMM Imported Copper Concentrate Index was reported at negative US$113.83 per dry metric tonne in early June and subsequently declined continuously to negative US$124.45 per dry metric tonne on June 26. On July 3, the weekly index fell further to negative US$128.25 per dry metric tonne, down US$3.80 per dry metric tonne from the previous assessment. The successive declines through the negative US$100 and negative US$120 per dry metric tonne thresholds demonstrate that the shortage of tradable spot concentrate continued to intensify. I. Supply: New Supply Falls Short of Expectations as Mine-Side Disruptions Continue to Constrain Tradable Availability Although several global copper projects were scheduled to deliver incremental concentrate supply in the first half of 2026, actual production growth came on stream significantly more slowly than the market had previously expected.The central issue on the supply side was not any single mine incident. Rather, disruptions at major mines, declining grades at mature operations, slower-than-expected ramp-ups at new projects, and changes in trade flows collectively reduced the volume of concentrate available for purchase in China’s spot market. Regarding Cobre Panamá, the Panamanian government approved First Quantum Minerals in April to remove, process and export stockpiled ore that had been mined before the operation was suspended. According to SMM, however, the current progress at Cobre Panamá mainly concerns the treatment of existing stockpiles and does not represent a full restart of mining operations.The mine remains subject to complex disputes involving mining rights, taxation, environmental requirements, local communities and political considerations. Consequently, even if a portion of the stockpiled material enters the market during the second half of 2026, its contribution to improving the global copper concentrate balance is expected to remain limited.Related analysis is available in the SMM article, “Cobre Panamá Copper Mine: From a World-Class Mine to a Shutdown Impasse—SGS Audit Signals the Possibility of a Restart”: https://hq.smm.cn/copper/content/103965399 Grasberg remains one of the largest variables affecting global copper concentrate supply in 2026. At the beginning of the year, Freeport-McMoRan forecast approximately 3.4 billion pounds of copper sales for 2026, based on the assumption that the Grasberg Block Cave would restart and ramp up in stages from the second quarter.Because the restart underperformed expectations, Freeport subsequently lowered its 2026 copper sales guidance to approximately 3.1 billion pounds in its first-quarter report. For the imported copper concentrate market, the significance of Grasberg extends beyond the mine’s headline production figures. Other important factors include the proportion of concentrate absorbed by Indonesia’s domestic smelting sector, PTFI’s smelter inventory arrangements, and the actual quantity of material available for shipment to China’s spot market. Should the recovery at Grasberg continue to fall short of expectations in the second half of the year, the shortage of clean spot concentrate is unlikely to ease materially. In Africa, the effects of seismic activity at Kamoa-Kakula remain ongoing. Ivanhoe Mines previously issued 2026 copper production guidance of 380,000–420,000 tonnes for Kamoa-Kakula, followed by 500,000–540,000 tonnes in 2027. The company also stated that dewatering and rehabilitation work at the Kakula mine was continuing.Compared with the previous medium- to long-term target of annualized production exceeding 550,000 tonnes, however, the pace of production growth in 2026 has slowed significantly. Kamoa-Kakula had been expected to be one of the most important sources of global copper concentrate supply growth in recent years. The slowdown in its production ramp-up has therefore further reduced the potential for mine-supply growth to support a recovery in TCs. In Chile, declining grades at mature mines, transitions toward deeper underground mining, and operational accidents continued to constrain supply flexibility. The effects of the 2025 cave-in at El Teniente extended into 2026. Codelco previously stated that the accident had resulted in the loss of tens of thousands of tonnes of copper production in 2025 and would continue to affect the subsequent recovery schedule.The incident illustrates the structural challenges facing Chile’s large and mature mining operations in areas such as deep-level mining, ground-pressure management, and the timely delivery of replacement and mine-life-extension projects. In addition to El Teniente, several other major Chilean mines continued to face declining grades, throughput fluctuations and maintenance-related disruptions, limiting the recovery potential of Chilean clean-concentrate supply. Peru’s supply performance was comparatively more resilient than Chile’s, although incremental production remained highly concentrated among a limited number of operations. Major mines such as Antamina and Las Bambas benefited during certain periods from higher ore grades, improved recoveries and operational normalization, supporting Peru’s overall copper production.From the perspective of the imported spot market, however, Peruvian supply remains exposed to community disruptions, transportation-corridor interruptions, mine-grade transitions and unstable shipment schedules. Moreover, because much of the incremental production is concentrated among a small number of large mines, it is insufficient to fully offset supply losses associated with Grasberg, Cobre Panamá and mature Chilean mines. In Mongolia, the ramp-up of the Oyu Tolgoi underground mine represents one of the relatively few clearly identifiable sources of incremental global mine supply in 2026. Rio Tinto disclosed that its copper production increased by 11% year on year in 2025, primarily due to the strong ramp-up at Oyu Tolgoi.Nevertheless, while additional output from Oyu Tolgoi is contributing to global supply growth, the incremental volume from this single project remains insufficient to reverse the overall tightness in the copper concentrate spot market, given the larger increase in Chinese smelting demand and recurring disruptions at other major mines. According to SMM estimates, disruptions at major global copper mines and incremental production falling short of expectations will have a combined impact of approximately 480,000 tonnes of contained copper in 2026. Uncertainty surrounding the realization of mine supply therefore remains the primary factor driving imported copper concentrate TCs lower. From a trade-flow perspective, China’s copper concentrate imports from Chile and Peru both declined to varying degrees during the first half of 2026. According to customs data, China imported 3.7640 million tonnes of copper concentrate from Chile during January–May 2026, down 228,000 tonnes, or 5.71%, year on year.Imports from Peru totaled 3.1002 million tonnes during the same period, representing a year-on-year decrease of 147,900 tonnes, or 4.55%. Lower arrivals from the principal South American origins intensified competition among Chinese smelters for alternative feedstocks, blended concentrates, land-transported concentrates and off-specification materials. China’s total imports of copper ores and concentrates amounted to 12.2758 million tonnes during January–May 2026, down 1.01% year on year. The modest decline partly reflected the relatively high comparison base in the corresponding period of 2025. Other contributing factors included strong consumption of copper anode and blister copper in the first quarter, temporary adjustments to some smelters’ raw-material mix, and changes in the arrival schedule of term-contract cargoes.The decline in headline import volumes should therefore not be interpreted simply as evidence of materially weaker concentrate demand from domestic smelters, nor does it have a direct one-to-one relationship with spot TC movements.For the spot market, the more important variables are the marginal volume available outside term contracts, the share of mainstream clean concentrate in the available supply pool, and smelters’ periodic inventory-replenishment requirements. During the first half of 2026, new smelting capacity, continued demand for off-contract inventory replenishment, and frequent mine disruptions kept the spot market tight even though the decline in apparent import volumes was limited. Spot TCs consequently remained under sustained downward pressure. II. Demand: China’s Smelting Expansion Continues While Production Cuts Remain Fragmented On the demand side, Chinese copper smelters remain the principal source of incremental global copper concentrate consumption. Although deeply negative TCs continued to compress core smelting margins during the first half of 2026, and some smelters temporarily reduced operating rates because of maintenance, feedstock constraints and processing-margin losses, the continued commissioning of new and expanded primary smelting capacity kept concentrate demand relatively inelastic. According to SMM statistics, new and expanded primary smelting capacity in China in 2026 is expected to correspond to approximately 800,000 tonnes of contained copper.Newly commissioned capacity typically requires substantial initial feedstock inventories. Even when spot TCs are deeply negative, new production lines must continue purchasing concentrate to ensure operational stability, complete equipment commissioning and ramp-up, and maintain market share. As a result, the practical effectiveness of production cuts by smelters as a mechanism for restoring TCs has been significantly weakened. The Chinese smelting sector in the first half of 2026 was characterized by the coexistence of maintenance-related disruptions and demand generated by capacity expansion. On the one hand, several smelters scheduled maintenance during the second quarter, temporarily reducing concentrate consumption. On the other hand, ramp-ups at newly commissioned facilities, term-contract obligations, low inventory safety margins and strong sulfuric acid earnings prevented smelters from implementing coordinated production cuts.Particularly in an environment where imported concentrate inventories remained structurally tight, some smelters continued to make essential market inquiries to secure production continuity, even when they reduced the frequency of their spot purchases. III. Smelting Economics: Strong Sulfuric Acid Margins Increase Tolerance for Negative TCs, but Volatility Risks Are Rising The earnings structure of copper smelters changed materially during the first half of 2026. Traditionally, smelter profitability has primarily been derived from TC/RC income and credits from gold, silver and other by-products. With spot TCs for imported copper concentrate moving deeply into negative territory, however, processing-fee income fell sharply and sulfuric acid margins became significantly more important. Overall copper smelting margins were weaker in the early part of the first half and improved later in the period. Declining TCs imposed substantial pressure on profitability, but elevated sulfuric acid prices, strong precious-metal prices and improved returns from certain other by-products provided a partial offset.Approximately 3.5–4.0 tonnes of sulfuric acid are produced as a by-product for every tonne of refined copper output. When sulfuric acid prices are high, acid earnings can substantially offset the impact of negative TCs and rising smelting costs. Nevertheless, according to SMM estimates, spot-based smelting margins at Chinese copper smelters have now approached break-even, and smelters have become noticeably less willing to purchase spot cargoes at increasingly unfavorable TCs. The rise in sulfuric acid prices has mainly been driven by two factors. First, geopolitical disruptions in the Middle East, tight sulfur supply and higher import costs raised the cost base of sulfuric acid production. Second, demand from phosphate fertilizers, chemicals, hydrometallurgical operations and battery-material producers provided broad-based downstream support.The sharp rise in sulfuric acid prices has reshaped the economics of copper smelting in China, with acid earnings accounting for a substantially larger proportion of smelters’ non-TC/RC income. This was also an important reason why Chinese smelters did not implement large-scale voluntary production cuts during the first half of 2026 despite the continued decline in TCs. The support provided by sulfuric acid margins is not without risk, however. Should geopolitical disruptions ease in the second half of the year, sulfur supply recover, or restrictions on Chinese sulfuric acid exports result in more material being redirected to the domestic market, sulfuric acid prices could retreat from their elevated levels.If acid margins narrow while copper concentrate TCs remain deeply negative, pressure on smelter profitability will become more visible again. Some higher-cost smelters may respond by extending maintenance periods, reducing utilization rates or cutting spot concentrate purchases. Sulfuric acid prices will therefore be one of the key variables determining whether TCs can stabilize during the second half of the year. IV. Spot Market: Frequent Mine Tenders and the Emergence of Index-Minus Pricing Trading activity in the imported copper concentrate spot market was uneven during the first half of 2026, but mine tenders and trader offers remained important channels for price discovery. As spot TCs continued to decline, outright fixed-price transactions repeatedly established new market lows, while index-minus pricing gradually became the dominant quotation format. Since the second quarter, trader offers have increasingly been expressed as an average of the SMM and Fastmarkets indices minus an additional differential. This pricing method indicates that, in an environment of continuously declining spot TCs, concentrate sellers increasingly prefer index-linked formulas that preserve their exposure to further downward movements in TCs. Smelters’ purchasing behavior remained conflicted. On the one hand, deeply negative TCs continued to compress smelting margins, limiting smelters’ willingness to accept expensive spot concentrate carrying extremely unfavorable processing terms. Some companies therefore reduced the frequency of their active inquiries.On the other hand, ramp-ups at new smelting facilities, insufficient inventory safety margins and uncertainty surrounding term-contract arrivals meant that some smelters still needed to replenish stocks to meet essential production requirements. Consequently, the market did not experience a collective withdrawal of buyers sufficient to drive a meaningful recovery in TCs. Instead, continuously lower mine-tender settlements pushed the spot index further into deeply negative territory. V. H2 Outlook: Limited Marginal Supply Recovery and Persistently Deeply Negative TCs Looking ahead to the second half of 2026, the imported copper concentrate spot market will continue to be driven by the interaction between the actual realization of mine-supply recovery and the resilience of Chinese smelting demand.On the supply side, the treatment of Cobre Panamá stockpiles, progress in the Grasberg restart, incremental production from Oyu Tolgoi, and shipment stability at major Peruvian mines may provide some marginal improvement. Based on current developments, however, Cobre Panamá has not achieved a full restart, the Grasberg recovery schedule has already been revised downward, production growth at Kamoa-Kakula has slowed, and mature Chilean mines remain exposed to declining grades and safety-related disruptions. The conditions required for a substantial easing of the global copper concentrate market are therefore not yet in place. On the demand side, new and expanded Chinese primary smelting capacity will continue to support structurally strong concentrate consumption. Although some smelters may temporarily reduce production because of losses, maintenance or feedstock constraints, the ramp-up of newly commissioned projects, the fulfillment of term contracts, sulfuric acid margins and regional refined-copper price differentials will continue to weaken the impact of production cuts on TCs.Should the effect of maintenance outages gradually diminish during the third quarter while newly commissioned capacity continues to ramp up, China’s demand for imported copper concentrate is likely to remain elevated on a sequential basis. Sulfuric acid prices will remain a key variable for smelting profitability in the second half of the year. Should sulfuric acid prices remain elevated or rise further, smelters will continue to demonstrate a relatively strong capacity to absorb negative TCs, limiting the potential for a recovery in spot TCs. Conversely, should sulfuric acid prices retreat from their highs, pressure on smelter profitability will increase again. Some smelters may respond by extending maintenance, cutting operating rates or reducing spot purchases, potentially allowing TCs to stabilize or recover modestly for a period. In the spot market, mine-tender results will remain an important leading indicator for TC movements in the second half of the year. As term-contract pricing becomes increasingly index-linked and more spot transactions adopt index-minus formulas, the SMM Imported Copper Concentrate Index is expected to play an even stronger role as the principal pricing anchor for market transactions. Should mine-tender settlements remain deeply negative, spot TCs may fall further. Conversely, if incremental volumes from the Grasberg recovery, Cobre Panamá stockpile processing and Oyu Tolgoi materialize at the same time, while maintenance activity among smelters increases, TCs may stage a temporary recovery. Overall, some marginal improvement in imported copper concentrate supply is possible during the second half of 2026. Nevertheless, given the continued commissioning of new Chinese smelting capacity, the shortage of tradable concentrate, and the support that strong sulfuric acid margins provide to smelter operating rates, a sustained and substantial recovery in spot TCs appears unlikely. Spot TCs for imported copper concentrate are therefore expected to remain volatile within deeply negative territory during the second half of the year. Any temporary recovery will depend largely on the actual realization of mine restarts, the extent to which smelters implement maintenance and production cuts, and changes in sulfuric acid profitability.

H1 2026 silver saw a sharp spike to 30,900 yuan/kg in January, then plunged 55% to 13,816 yuan/kg by June, driven by squeezed spot liquidity and Fed policy reversal from easing to hawkish. Supply grew steadily; PV silver demand fell 21% YoY. H2 outlook: wait for inflation signals and Fed pivot, silver likely remains under pressure.