China’s primary copper producers could seek more scrap

A lack of profits and restricted supplies of copper ore concentrates do not seem to be slowing down output at China’s primary copper companies, according to industry analysts.

In an early March report, Bloomberg cites Metal Bulletin and Shanghai-based Mysteel Global as sources reporting on the challenges in China’s primary copper sector—by far the world’s largest.

Reported statistics indicate capacity and output keep rising in the sector, despite what Bloomberg calls “a collapse” in the processing fees that help financially sustain the red metals industry.

Bloomberg cites a Mysteel survey conducted in China that predicts refined copper output there will rise by nearly 5 percent this year to 12.4 million tons.

The forecast seems curious in a nation where, according to Metal Bulletin and Bloomberg, smelting fees for spot cargoes of ore have turned negative, with firms paying over $20 a ton to process concentrate.

That $20-per-ton fee, also known as a treatment charge (TC), is down severely from a $90-per-ton TC that was common in August 2023, according to Metal Bulletin.

The industry observers says demand for copper in China is solid in its renewable energy and electric vehicle (EV) sectors, but that “hardly justifies increasing output if companies are actually losing money on what they produce,” Bloomberg says.

With the processing of ore an unprofitable endeavor in China and concentrates in a supply pinch, Bloomberg cites a Mysteel analyst who indicates some producers are seeking red metal scrap as a melt shop feedstock to keep furnaces running.

Many of China’s largest copper producers are state-affiliated companies of outright state-owned enterprises (SOEs).

The pursuit of scrap by such companies in the copper, aluminum and steel industries was likely the reason behind the founding of a new Chinese SOE called China Resources Recycling Group Co. Ltd. (CRRG) last year.

CRRG was established to build a national platform for recycling and reusing resources, according to reports in Chinese state-affiliated media outlets last year.

One of those reports from state-owned Xinhua, said three of the new SOE’s main shareholders are metals production firms: steelmaker Baowu Steel Group, Aluminum Corp. of China (Chalco) and China Minmetals Corp., a producer of copper, lead and zinc.

Red metal scrap itself has enjoyed a strong demand-driven market for most of this decade, so the pursuit of such material by the SOEs might not serve as a cost-cutting measure.

Sponsored Content

Still relying on manual sorters?

Let AI do the heavy lifting. Waste Robotics delivers reliable, high-performance robots tailored for complex waste streams. They require minimal maintenance, are easy to operate, and are designed to boost your recovery rates. Smarter sorting starts with the right partner. Waste Expo Booth #1969 & REMA #2843

Click here to see our robots in action!

According to Bloomberg, though, such demand nonetheless could transpire.

“The bigger, government-owned firms are also willing to lift production and sustain losses to support their local economies and retain market share,” the report says.