The copper supply chain is facing the "tightest" moment in history: intense competition at the mine and smelter levels, with metal premiums soaring to record highs!

The global copper market is experiencing the tightest supply chain period in history. On November 28, according to media reports, at an industry conference held in Shanghai this week, miners and smelters engaged in intense negotiations over processing fees, with miners pressuring smelters to accept record-low processing fee benchmarks, while the annual premium for refined copper shipped to China surged to an all-time high. Nicholas Snowdon, head of metals research at Mercuria Energy Group, stated during the conference, "This is a historic moment of tension in the copper supply chain." Factors such as supply-demand imbalance and uncertainties surrounding Trump's trade policies have collectively driven this market turmoil. Reports indicate that the intensity of price negotiations is unusually high. Executives from German copper smelter Aurubis AG expressed readiness to reject excessively low annual processing fee benchmarks and voiced dissatisfaction with "negative processing fees"—where smelters effectively have to pay miners to process raw materials. Major metal industry associations in China also oppose "unsustainable" negative processing fees. Analysts point out that the impact of this game is spreading globally. As the U.S. attracts a large amount of refined copper due to tariff expectations, suppliers like Chile's Codelco have offered some Chinese customers a record premium of $350 per ton. Direct Confrontation Between Smelters and Miners For years, smelting capacity has expanded disorderly, coupled with a series of unexpected supply disruptions this year, giving miners a dominant position in negotiations. For most of this year, spot processing fees, which typically serve as guidance for annual contracts, have remained in negative territory. This has led to a stalemate in negotiations, with some participants potentially withdrawing from the global pricing system that aims to reach an initial benchmark between major miners and Chinese processors. This will make it more difficult for both parties to plan supply for the year. Tim Kurth, Chief Operating Officer of Aurubis' custom smelting business, urged miners to consider the long term and avoid "a war." He stated that if this conflict can be avoided, the benchmark pricing system can be preserved—especially as smelters begin to control excess capacity growth and more mine supplies come online. The major metal industry association in China strongly opposes "unsustainable" negative processing fees as both sides begin annual contract negotiations. The miners' tough stance stems from the pressure accumulated over years of excessive smelting capacity expansion, a situation exacerbated this year by unexpected supply disruptions. U.S. Premium Triggers Global "Extreme Mismatch" Reports indicate that traders and producers again anticipate a large amount of refined copper flowing to the U.S., where prices are rising due to ongoing expectations of import tariffs. Snowdon stated that by the first quarter of 2026, the U.S. could hold 90% of the world's copper inventory. This will create a chain reaction. The more copper cathodes the U.S. absorbs, the more severe the shortages in other markets will become. Suppliers like Chile's Codelco have unhesitatingly offered some Chinese customers a record premium of $350 per ton. Snowdon described this as an "extreme mismatch" and stated, "The strength of this pull factor and the scarcity risks that copper markets outside the U.S. will face in the next three to six months should not be underestimated." The shift in the flow of refined copper is reshaping the global supply landscape, with soaring premiums reflecting the intensifying regional supply tightness