Chinese copper smelters are facing mounting pressure as falling sulphuric acid prices erode a key source of profits that had helped offset losses from processing copper concentrate at negative fees, industry sources said.
The double blow for China’s smelters, which produce more than half of the world’s refined copper, has prompted some operators to extend maintenance outages this quarter. That is keeping output on track for its slowest pace in decades and raising the prospect of operating losses in coming quarters, analysts said.
Smelters including Jiangxi Copper (SHA: 600362), (HKG: 0358) and Yunnan Copper (SZSE: 000878) reported sharp declines in third-quarter profits from the previous quarter, according to Reuters calculations based on company filings.
Smelters typically earn treatment and refining charges (TC/RCs) for converting copper concentrate into refined metal. But a severe ore shortage has forced them to accept negative spot TC/RCs for almost two years, effectively paying for raw material supply.
“Until this northern (hemisphere) summer, the only financial relief a copper smelter got from zero-to-deeply negative TC/RCs, was via its byproducts,” said Panmure Liberum analyst Tom Price. “Now they’re getting crunched too.”
Smelters remained profitable in the first half of 2026 largely because sulphuric acid prices surged after disruptions to shipments from the war-hit Middle East.
But that windfall is fading. Chinese sulphuric acid prices have fallen to about 1,484 yuan ($222.50) per metric ton from a July peak of 2,107 yuan, according to data from commodities information provider Zhuochuang.
“Sulphuric acid prices dropped 30% in Q3. And if the US-Iran war ends tomorrow, expect more downside,” Price said.
Spot copper treatment charges slid to a record low of minus $246.40 a ton on October 30, according to Argus data.
Two managers whose companies are members of the China Smelters Purchase Team (CSPT), which includes most of the country’s copper smelters, said production cuts were coming, although they declined to provide details and asked not to be named because of the sensitivity of the matter.
Some smelters have already shut down units for maintenance due to waning profitability.
CSPT member Daye Nonferrous (HKG: 0661) recently flagged falling sulphuric acid prices in an exchange filing, warning that challenges facing its operations were becoming “even more severe”.
“With both acid prices and processing fees falling, smelters will be under tremendous pressure in 2027 when it’s getting more difficult for them to make money,” said Yang Hua, an analyst at consultancy Mysteel.
($1 = 6.6693 Chinese yuan)
(Reporting by Tom Daly and Amy Lv. Editing by Tony Munroe and Mark Potter)
