This year’s Asia Copper Week gathering in Shanghai (22-26 November) reinforced expectations that the refined copper market is likely to be broadly balanced at a global level in 2026, albeit with heightened regional and policy-driven uncertainties. The US import arbitrage is driving record cathode benchmark premiums, reshaping trade flows and forcing a rethink on procurement strategies. While Chinese demand is expected to remain resilient, there was less confidence in the potential for a recovery in consumption in the rest of the world. Tight fundamentals are expected to persist in the concentrates market with an uplift in other revenue drivers reducing the likelihood of near-term smelter capacity cuts outside of China.
2026 global refined expectations close to balanced
Expectations for the global refined copper market balance in 2026 ranged from small (< 100 kt) surpluses to small deficits. Market balance estimates for 2025 were in a wide range with surpluses of 100-500 kt - this variance largely reflecting differing treatments of the recent build-up of US inventories. Participants expect the CME import arbitrage to continue to incentivise the delivery of cathode to the US in the first half of 2026, tightening availability in other markets.
China demand expected to remain resilient in 2026
China’s demand outlook for 2026 was seen as broadly supportive. Expectations for refined demand growth were in the 2-3% range and total copper demand growth in the 1.5-2.5% range, reflecting an expectation of a further shifting of direct use copper from the demand (semis) side to the supply (refined) side.
Areas of upside risks included grid investment where there is an expectation of higher spending to safeguard reliability and stability, including to meet AI-related data centre power needs. There was optimism in demand for copper in energy storage systems, expected to see 50%-80% y/y growth (~150kt) in 2026. While there expectations of a continuation of rising net exports of semis and wire & cables - driven by Belt and Road Initiative projects and intense domestic competition pushing producers overseas.
Downside risks centred around the construction sector with residential starts remaining in contraction and with no significant medium to long term stimulus in sight, and solar where installations are expected to contract in 2026 due to the end of the fixed electricity price incentive in May this year and anti-involution policies. Demand for consumer durables is expected to remain reliant on government schemes such as trade-in subsidies, with any scaling back or delays to see a downside risk to this category. Market concerns have emerged over changes to new energy vehicle (NEV) incentives in 2026, notably the halving of the purchase tax benefit (capped at RMB15,000 /unit) and the central government’s decision to end trade in programmes.
Record cathode benchmark premiums see limited uptake
Codelco has quoted cathode premiums to Chinese buyers of at least $335 /t (2025: $89 /t). Market feedback suggests there is likely to be limited uptake at these levels. The prevailing view is that Codelco will prioritise shipments to the US market, limiting the volume offered into China and other Asian markets in 2026. CRU’s assessed average premium for ER cathodes into China for this year to November is $69 /t, $20 /t below this year’s benchmark level.
More broadly, cathode supply contracts to Asian buyers for 2026 have been slow to progress due to a wide range in expectations. For EQ material, Chinese semi-fabricators have expectations in the $30-50 /t range, while sellers are asking for levels of at least $80 /t. For the broader Asia region traders are asking for $80-150 /t, with some offers to India from Japanese traders understood to be at levels above $400 /t CIF.
Benchmark TC/RC expectations remain centred on zero
Expectations for the 2026 China TC/RC benchmark remain clustered around zero - or single digits either side. Negotiations in Shanghai progressed at a slow pace as most smelters have yet to counter-offer due to the divergence in buyers’ and sellers’ expectations Early in the week we heard unconfirmed reports a major miner had offered to supply concentrates to a major Chinese smelter(s) for 2026 at a TC/RC of -$15/-1.5¢, with at least one Chinese smelter rumoured to have responded with a bid of +$10/1.0¢.
There are concerns that some existing multi-year contracts, entered into by smelters with traders and priced at an average of miner-to-trader (M/T) and trader-to-smelter (T/S) indices, will continue in 2026. With the wide divergence in M/T and T/S terms, this is likely to continue to weigh on smelters under those contracts.
Some traders reportedly offered material at spot index minus 5 or BM minus 29 to smelters for long-term contract packages next year, indicating expectations of continued concentrate tightness and a wider gap between traders and miners on LTC contract terms.
Acid prices to play a bigger role in smelter decisions
Higher sulphuric acid prices are now playing a larger role in supporting smelter economics globally. With recent export sales at above $100 /t, north Asian smelters are expected to see a ~$20 /t y/y uplift in acid contract prices in 2026. This reflects tighter sulphur and acid markets, which includes reduced acid supply as a result of Indonesian smelter curtailments triggered by the recent Grasberg mud-rush incident. After a brief retreat from their August high of ~RMB750 /t, generally to ~RMB550 /t in September, Chinese domestic acid prices are now back above RMB800 /t.
Downside risks to 2026 mine supply forecasts
Consensus expectations for global concentrate mine supply growth in 2026 are ~400,000-500,000 t (~2-3% y/y), lower than our early-October estimate of 4% growth made prior to the release of miners’ Q3 reports and Teck Resources’ 8 October update, which included a lowering of their 2026 guidance midpoint by 77,500 t. Beyond this, market participants remain concerned about the slow pace of sanctioning of mine projects, increasing the risks of supply shortages later this decade. The timing of the government approval of Cobre Panama’s (350,000 t/y) restart, and at least a six-month requirement for the recruitment of experienced workers and repairs of equipment on site, is likely to result in a slower than expected ramp-up (CRU September forecast: 120,000 t in H2 2026, 60,000 t after probability adjustments).
China’s 2026 refined copper supply expected to grow despite possible smelter cuts
As record low TC/RCs have been far below sustainable levels with elevated metal payables, CSPT announced a more than 10% utilisation rate cut in primary smelting capacity in 2026, to help rebalance the copper concentrates market. This is the second time CSPT has called for smelter cuts, since it proposed a 5-10% joint cut in early 2024 without any impact on refined output. The consensus on China’s refined copper growth for 2026 appears to be around 3-4% y/y, with more scrap flowing into the smelting and refining sectors, in order to minimise the loss in primary smelter output due to the shortage of concentrates.
