The China Smelter Purchasing Team (CSPT) has announced it plans to cut primary smelting capacity by over 10% in 2026, following little progress in the annual TC/RC benchmark negotiations during CESCO Asia Week in Shanghai. These CSPT smelter cuts could potentially remove ~1 Mt of copper-in-concentrate demand. Based on our understanding, it is not necessary for each CSPT smelter to implement a uniform 10% cut in practice, even though some smelters have already signaled plans to reduce production next year.
A 10% CSPT smelter cut could remove ~1 Mt copper demand
The China Smelter Purchase Team (CSPT) held a meeting on Friday 28 November, after little progress was made during the BM negotiations during Asia Copper Week in Shanghai. The meeting took place against a background of record low spot TC/RCs, far below sustainable levels for smelters, even with elevated metal payables. In order to promote the healthy, stable, and high-quality development of the global copper industry and implement national anti-involution policies, the member companies reached the following consensus:
- Cut utilisation rate in primary smelting capacity by more than 10% in 2026 to improve the ‘fundamentals of the copper concentrate market.
- Protect the benchmark system and strengthen direct engagement with mines and resolutely resist unreasonable index pricing with traders.
- Establish a supervision and management mechanism for members’ participation in spot bidding and spot procurement activities to prevent malicious competition.
- Develop a blacklist system, monitor and evaluate suppliers and inspection Jointly resist suppliers and inspection institutions that maliciously disrupt the market.
This is the second time that CSPT 10% smelter cuts have been called for since the team proposed a joint cut of 5–10% in early 2024, which had limited impact on primary and refined output for the year. The implementation of CSPT smelter cuts to primary output is likely to be monitored closely, as there is speculation as to whether smelters will reduce production by this amount without impacting refined production.
According to CSPT’s primary smelting capacity in 2026 from CRU Copper Concentrate Market Outlook database, a smelter utilisation decline by 10% would be equivalent to 961,000 t, which could offset the forecast global concentrate deficit of 834,000 t for 2026 entirely. The question is whether this significant cut could be realised to this extent. It would represent a 10 % y/y decline (-806,000 t) in CSPT smelters’ primary production versus the previous 2% y/y increase (+155,000 t) before raw material adjustments in 2026.
Achieving a smaller smelter cut is more realistic
In 2026, the average utilisation rate of the sixteen CSPT members was anticipated to drop by three percentage points to 82% before raw material adjustments, due to a slow ramp-up of new capacity and lack of raw materials. A 10% cut in utilisation rates would further drag down the average rate to 72% – a record low. For most members, this would be well below their average utilisation over the past five years, suggesting a uniform CSPT 10% smelter cut at each CSPT smelter is unlikely to be implemented in practice, even though some smelters have already signalled plans to reduce production next year.
According to our estimates from Copper Concentrate Market Outlook database (request a demo here), China’s CSPT primary smelting capacity has reached 9.10 Mt in 2025 with an additional 460,000 t/y of smelting capacity from three new smelter members. This figure is expected to increase to 9.61 Mt in 2026, following the commissioning of Chifeng Jinjian II (300,000 t/y) and the ramp-up of Jinguan II (500,000 t/y). The CSPT will account for 83% of China’s total primary smelting capacity.
The potential increase in primary production before raw material adjustments was expected to be 323,000 t in 2026, representing a 2% y/y increase, half of which was attributed to CSPT smelters. A CSPT smelter cut could result in a decline of 638,000 t in China’s total primary metal production, hitting a record loss of 6% y/y.
Prior to this announcement, market expectations were for China’s refined copper output to grow by around 3-4% y/y in 2026, with higher scrap use in smelting and refining helping to offset primary output losses caused by concentrate shortages. In practice, however, it would be extremely difficult for smelters to secure an additional ~961,000 t of scrap to fully replace the implied reduction in primary production to meet these expectations for refined output growth.
In summary, a realistic outcome for the proposed CSPT smelter cuts is likely to be a smaller smelter utilisation decline across CSPT smelters, particularly at smelters operating at a low utilisation rate due to a shortage of raw materials. The adjustment is therefore expected to unfold gradually over the coming quarters, with 2026 likely to be characterised by more frequent, and longer, periods of smelter maintenance.
For readers interested in how copper or copper concentrates will influence the future of base metals and beyond, CRU’s Copper Services provides detailed understanding of current and emerging trends, while our Copper Smelting and Refining Asset Service provides best-in-class cost coverage and more. If you want to hear more about our work on base metals, raw materials or end-use demand, get in touch with us – we’ll be happy to answer your questions.
