On August 7, the SMM Imported Copper Concentrate Index (weekly) was reported at -$173.91/dmt, down $14.54/dmt from the previous -$159.37/dmt. The payable indicator for domestic trade ore with 20% grade stood at 98.5%-99.5%. This week, spot market transactions were relatively active, but transaction prices declined further. In spot trading, a trader sold 30,000-50,000 mt of bundled ore for delivery from Q4 2026 to Q1 2027 to a smelter at -$170/dmt, QP: M+1/M+5; another trader sold 10,000 mt of clean ore at -$183/dmt to a smelter, with shipment in August/September, QP: M+1/M+5; a trader sold 40,000-60,000 mt of bundled ore for Q4 delivery at -$170/dmt to -$175/dmt to a smelter, QP: M+1/M+5; a trader sold 20,000 mt of bundled ore at -$174/dmt to -$175/dmt and also sold 10,000 mt of high-arsenic ore at around -$100/dmt to smelters, with shipment in Q4, QP: M+1/M+4; a trader sold 70,000 mt of bundled ore to smelters at an index minus $18/dmt, with shipment in Q4; a trader sold 10,000 mt of bundled ore for August/September shipment at an index minus $22/dmt to $23/dmt to smelters; a trader offered 10,000 mt of South American clean ore at an index minus $20/dmt. In mine tenders, on the trader side, the winning bid price for 10,000 mt of BISHA ore, September-October shipment, was -$240/dmt to -$230/dmt; the winning bid result for Chuquicamata was below -$200/dmt. Overall, fixed-price transactions increased in the spot market this week. Due to weather-related shipment delays from some mines in Chile and Peru, there was restocking demand. Coupled with rigid restocking needs from new smelting capacity, spot TC continued to deteriorate, and smelter profit margins kept narrowing. However, smelters had limited acceptance of low-priced supply. Downward pressure remained but downside room was limited. According to foreign media reports, the DRC government signed a decree on June 29 to ban the export of copper and cobalt concentrates, effective immediately. Under "strategic" conditions, the Minister of Mines may still grant an export exemption for a period of one year. It should be noted that the DRC had already imposed strict controls on copper and cobalt concentrate exports. Under current policy, such exports are prohibited in principle, and enterprises must obtain government-approved export quotas or exemptions before shipping. Therefore, this policy is more about reaffirming and further tightening the existing management framework, rather than a sudden complete halt to copper concentrate exports. The additional impact of the ban on short-term global copper concentrate trade is likely to be relatively limited. What is more noteworthy is the policy signal it sends: As the strategic importance of critical minerals grows, resource-rich countries are using export restrictions, local processing mandates, and tax policies to capture a greater share of the industry chain and resource value added at home. Resource nationalism is increasingly disrupting global copper raw material flows and the supply landscape. On August 4, Codelco announced that it had temporarily suspended the development and construction activities of the Andes Norte project at its El Teniente mine, due to a potential new-type seismic risk in the deep areas of the project. This measure only applies to the Andes Norte project and does not mean a full stoppage at the El Teniente mine. Other production areas at the mine continue to operate, with seismic monitoring and related safety measures in place. According to the latest data from China Customs, China's copper concentrate imports in July 2026 totaled 2.379 million mt, up 1.88% MoM and down 6.93% YoY. From January to July 2026, cumulative copper concentrate imports amounted to 16.985 million mt, representing a cumulative YoY decline of 1.8%. On August 6, 2026, SMM recorded copper concentrate inventories at eleven ports of 692,000 mt in physical content, up 27,600 mt in physical content from July 31. The main increase came from Fangchenggang Port and Qinzhou Port, up MoM by 20,000 mt and 29,000 mt respectively; the main decrease was from Yantai Port and Qingdao Port, down MoM by 22,400 mt and 20,000 mt respectively.

China's sulphuric acid market remains weak, with price rises in Northeast China and Inner Mongolia failing to mask the overall downtrend [SMM Sulphuric Acid Weekly Review]

On August 5, 2026, after communicating with major enterprises and filing with the National Development and Reform Commission, the Sulphuric Acid Association and the Phosphate and Compound Fertilizer Association jointly decided: to ensure fair and relatively stable prices, the "latest copper concentrate TCs" in the original guidance price formula was revised to the "average of the past three months' copper concentrate TCs". After careful consideration, the copper concentrate TCs used in the calculation are based on the SMM Copper Concentrate Index. Calculated based on the new formula, the August smelting sulphuric acid guidance price is 1,555 yuan/mt. Historical guidance prices were May (1,406 yuan/mt), June (1,456 yuan/mt), and July (1,574 yuan/mt).

[SMM Analysis: High Imports Yet Lower TCs: Why China’s Copper Concentrate Market Is Getting Tighter amid Rising Purchases] In H1 2026, China’s copper concentrate imports stayed high but edged down YoY, with the pace of imports slowing noticeably in Q2 compared with Q1. At the same time, new and expanded smelting capacity continued to come onstream, and growth in copper concentrate demand outpaced the increase in import supply, driving spot TCs further down. On July 24, the SMM Imported Copper Concentrate Index (weekly) fell to -$154.76/dmt, further highlighting the contradiction of high imports coexisting with deeply negative TCs. Looking ahead to H2, stockpiling, feeding, and production ramp-up at three new smelting projects in China will add to rigid procurement demand. Higher production from Oyu Tolgoi, a seasonal recovery in South American mine output, and shipments of some stockpiled ore are expected to support a QoQ increase in China’s copper concentrate imports. However, the resumption of production at Grasberg will still take time, and local smelting capacity in Indonesia and Africa continues to absorb domestically produced concentrates, meaning that increases in overseas mine production may not proportionally translate into accessible supply for China. China’s copper concentrate imports are expected to remain high in H2 and rebound somewhat from H1, but the global supply-demand “hard deficit” for copper concentrates is unlikely to ease in the short term, and freely tradable, suitable supply will stay tight. In the absence of large-scale, sustained production cuts on the smelting side, spot TCs are more likely to show an L-shaped pattern of low-level operation with intermittent rebounds, and the configuration of rising imports alongside negative TCs will persist.

According to the latest data from the General Administration of Customs, China imported 210,900 mt in physical content of copper scrap and shredded copper scrap in June 2026.......

On July 17, the SMM Imported Copper Concentrate Index (weekly) came in at -$146.15/dmt, down $13.31/dmt from the previous reading of -$132.84/dmt. The payable indicator for 20% grade domestic trade ore was reported at 98%-99%. The copper concentrates spot market saw slightly more activity this week compared to the previous week. In spot transactions, a trader sold 10,000 mt of Las Bambas to a smelter at a deduction of $15-16/dmt from the average of the SMM and FM indices, for September loading; meanwhile, a trader sold 10,000 mt of Calcine at a premium of $5/dmt to the average of the SMM and FM indices; a trader sold 10,000 mt of clean ore and 10,000 mt of Bisha at a fixed price of -$140/mt to a smelter, for August-September loading; a trader sold 20,000 mt of clean ore at a fixed price of -$155/mt, for Q4 loading; additionally, a trader sold 20,000-30,000 mt of bundled ore at a deduction of $20/dmt from the index, for loading from Q4 2026 to Q1 2027; a mine sold 10,000 mt of South American clean ore at a fixed price of -$160/dmt, for September loading, QP: M+3. On the tender front, the previous Jabal tender result was out, with a deal concluded on the trader side at a fixed price of -$250/dmt for 40,000-50,000 mt, for H2 shipment; the result of the Newmonet tender for 20,000-30,000 mt of Red Christ is still pending; in addition, SMM learned that a large mine previously tendered 100,000 mt in physical content of copper concentrates, with bids from traders coming in at over -$200/dmt for 2026 shipment, -$200/dmt for 2027 shipment, and over -$100/dmt for 2028 shipment. Overall, the copper concentrates spot market continued its trend of probing lower this week, with spot TCs declining further from the prior period. Smelters still had rigid restocking demand, but as TCs continued to drop, copper smelting profits were further squeezed, making smelters more cautious about accepting low-priced cargoes and tilting purchases more toward rigid restocking. Meanwhile, mine tenders and trader offers kept edging lower, and the low-priced spot deals further shook smelters' psychological price levels, widening the divergence between buyers and sellers. In the short term, spot copper concentrate TCs still face downward pressure, with the market closely watching smelters' acceptance of deeply negative cargoes. According to the latest data from the General Administration of Customs, China's copper concentrate imports in June 2026 were 2.335 million mt, down 1.10% MoM and edged up 0.03% YoY. From January to June 2026, cumulative imports of copper concentrates reached 14.609 million mt, edging down 0.9% YoY. Chile is currently being affected by a strong winter frontal system, with the main impact expected to be concentrated from July 16 to 17 and likely to persist through July 20–21. This weather event shows notable regional differences: moderate to heavy snowfall and strong winds are forecast for the high-altitude and mountainous areas of northern mining regions such as Antofagasta and Atacama, while central to southern Chile faces persistent heavy rainfall, raising the risk of localized flooding, landslides, and mudslides. The Chilean government has activated a preventive emergency response, and mining authorities have been communicating contingency plans with major mining enterprises. According to SMM’s communications with local industry participants, heavy snowfall and rainfall could cause short-term disruptions to road transport and port loading at some mine sites, with a risk of delays in the shipment pace of copper concentrates and copper cathode. The actual impact will depend on the duration of the weather and operating conditions at the major mines. On July 16, BHP released its production report, showing that group copper production in the fourth fiscal quarter ended June 30 was 491,900 mt, down 5% YoY and below the 516,200 mt recorded a year earlier, driven by lower output at the Escondida and Pampa Norte mines. For fiscal 2026, total group copper production was 1.95 million mt, down 3% YoY, a pullback from the 2.02 million mt in fiscal 2025 but the second consecutive year close to 2 million mt. Among them, Escondida—the world’s largest copper ore mine—produced 1.2612 million mt of copper on a 100% basis for the full year, down 3% YoY, mainly due to a decline in head grade at the beneficiation plant from 1.02% a year earlier to 0.90%. On July 17, SMM data on copper concentrates inventory at eleven ports showed 648,200 mt in physical content, down 42,000 mt from July 10. The main declines came from Fangchenggang Port and Qinzhou Port, down 30,000 mt and 21,000 mt WoW, respectively.

July entered the traditional consumption off-season, with SHFE copper fluctuating mainly between 102,000 and 104,000 yuan/mt. What factors are driving the front-month strength? This article sets aside macro factors and takes a closer look at fundamental indicators: why does the seasonal off-season exhibit a backwardation structure? In fact, it all boils down to supply. The most direct indicator is the change in inventories (social inventories have destocked by about 60,000 mt over the past two weeks). The heavy destocking over multiple consecutive statistical cycles reflects both real supply-demand factors and unexpected factors (such as the recent typhoon, which added fuel at a very opportune moment). The continued decline in spot copper concentrate TCs shows that smelters are still struggling to purchase raw materials. Coupled with copper prices consolidating within a range, copper scrap being disrupted by policy issues, relatively limited shipments, and the price spread between primary metal and scrap offering no advantage for consumption, anode plate supply is also relatively tight. The raw material supply tightness remains unignorable. In fact, clues can already be seen from China's copper cathode production in June, which unexpectedly fell by about 20,000 mt. From July to August, large smelters are still undergoing maintenance, mostly affecting volumes supplied to east China. Despite efforts to keep long-term contract supply of copper cathode as unaffected as possible, the spot order market is indeed tight. Moreover, there is room for paper business in the spot copper cathode market, which has tied up some available cargoes, making actual available spot cargoes even scarcer. Looking at the price spread between non-registered and SX-EW copper, it has been rapidly narrowing recently. Downstream purchase willingness for such cargoes has increased, on one hand due to tight copper scrap, and on the other hand, as the marginal price increases for standard-quality copper and high-quality copper have widened, non-registered cargoes have become more cost-competitive. Currently, there is divergence regarding the SHFE copper price of 103,000 yuan/mt, but most downstream players indicate that new orders exist when copper prices are between 101,800 and 102,800 yuan/mt. Coinciding with concerns over typhoon impact on cargo pick-up, cargo pick-up was concentrated during the working days last week, and active pick-up also occurred over the weekend in areas unaffected by the typhoon. Downstream operating rates partially improved last week, mainly in rod and tube sectors. The aggressive destocking last Thursday and this Monday did have consumption factors at play, but supply issues remain the main cause of the recent continued destocking. Additionally, due to the typhoon, some cargoes could not arrive at ports and enter warehouses normally, thus accelerating the destocking speed in the recent two statistical cycles. Supply is indeed tight, consumption is supported, and combined with financial factors and typhoon disruptions, these factors jointly favor the widening of the near-month backwardation structure. But in fact, even without the typhoon disruptions, the strengthening of the backwardation structure, given the above fundamental factors, had been "long in the making." The market is concerned about whether a large inventory buildup will materialize after the typhoon impact ends, but this is not the case. Recently, imported cargo arrivals have been scattered, and the concentrated maintenance at smelters is unlikely to end in the short term, so domestic supply will not increase sharply. Even if consumption sentiment retreats slightly, inventory is unlikely to see a concentrated buildup. Moreover, against the backdrop of strong spot premiums, most cargo will be held as spot material in warehouses rather than as futures warrants. Currently, the warrant inventory ratio in the Shanghai region is not at an absolute low compared to historical years, which caps further widening of the backwardation structure. It is expected that near delivery, the SHFE near-month contract backwardation could still widen to 300 yuan/mt, while Shanghai spot copper premiums are currently at 200 yuan/mt. Since copper prices began their upward trend in 2024, a strong coexistence of backwardation and spot premiums has been rare, so recent subtle changes in fundamental indicators have drawn significant attention.

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.

SMM Analysis: In H1 2026, the core operating logic of China’s copper anode market can be summarized as follows: overseas project startups drove a recovery in imports, but the tightening of domestic secondary copper policies rapidly shifted the supply-demand pattern from a surplus in Q1 to tightening in Q2...

[SMM Analysis: 2026 Copper Anode Market H1 Review and Outlook: Supply Contraction Reverses the Pattern] In H1 2026, the core operating logic of China's copper anode market can be summarized as: the commissioning of projects outside China drove a recovery in import growth, but tightening domestic secondary copper policies rapidly reversed the supply-demand pattern from loose in Q1 to tight in Q2......