Producers of refined copper in China have resorted to using scrap metal for their operations as the availability of copper concentrate feedstocks tightens. Because of limited concentrate availability, processing charges have dropped even more into negative territory.
The change in the feedstock used underscores how changes in the global supply of copper concentrate have propelled refiners in China to change the structural underpinnings of their operations. This shift also signals possible changes to copper concentrate prices on global markets, which are already higher than they have ever been in recent times.
Antaike, a Chinese government-backed research entity, reveals that 25.2% of the feedstock utilized in the first six months of 2026 by copper smelters in the country was scrap copper. This share marks a 2.7% increase from the amount that was utilized during the same duration in 2025.
The growing use of scrap copper comes as the charges levied by refiners for processing concentrate delivered by miners have tumbled to record lows due to concentrate supply shortages. The latest figures show that smelters are charging -$173 for each metric ton of concentrate that miners deliver. This means that smelters are paying miners that amount of money just so they can have copper concentrate to refine.
The smelters are willing to pay this much because they earn revenue from the by-products like gold and nickel that they can extract from the copper concentrate delivered to their facilities. However, smaller smelters or those with aging equipment have a limited capacity to extract these by-products, and this is putting them under immense financial strain.
Concentrate processing fees have dropped by 244% since the beginning of 2026, highlighting how concentrate supply has become tight over recent months.
To compound the supply squeeze even further, Chile, the main supplier of concentrate to smelters in China, has experienced severe storms that have disrupted the mining operations of several major companies. Shipment delays are expected to persist for at least a month, and that is raising the demand for scrap copper as smelters scramble to remain operational.
It therefore isn’t surprising that imports of scrap copper into China totaled 4.28 million metric tons in the first six months of this year. These imports were largely sourced from Thailand, Japan, and other Southeast Asian countries. Imports from the United States remained subdued.
As the supply of copper concentrate continues to be constrained, producers like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) could see their revenues from this by-product of their operations rising in the coming months.
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