EB SECURITIES released a research report stating that tight ore supply is transmitting to refined copper, maintaining a bullish outlook for record-high copper prices. The consensus among CSPT member companies to reduce output indicates that copper concentrate shortages have now impacted the refined copper segment, with supply constraints expected to persist until at least 2026. Key points from the report include:
1. **CSPT Consensus Agreement** On November 28, 2025, the China Smelters Purchase Team (CSPT) member companies reached an agreement to address severely depressed copper concentrate treatment and refining charges (TC/RCs). The measures include: - Reducing copper smelting capacity by over 10% in 2026. - Upholding benchmark pricing systems and strengthening direct partnerships with miners to resist unreasonable trader pricing models. - Enhancing supervision of member participation in spot tenders and procurement. - Establishing a blacklist system to penalize suppliers and inspection agencies disrupting market order.
2. **Capacity Coverage** CSPT members collectively operate approximately 70% of China’s refined copper capacity (10 million tons/year out of 14.22 million tons as of October 2025).
3. **Copper Mine Disruptions** Frequent supply disruptions in 2025 have exacerbated shortages: - Ivanhoe Mines’ Kamoa-Kakula cut 2025 output guidance by 150k–210k tons due to seismic activity. - Codelco reduced output by 30k tons following an accident at El Teniente. - Freeport-McMoRan slashed Q4 2025/2026 production by 200k/270k tons after a mine collapse at Grasberg. - Teck Resources lowered output guidance for Quebrada Blanca through 2028 due to tailings issues. Total 2025/2026 global supply reductions: 420k/350k tons (~1.8%/1.5% of 2024 output).
4. **Smelter Profitability Crisis** TC/RCs (fees paid to smelters) have collapsed: - Spot TC: -$43/ton (historic low as of November 28, 2025). - Annual contracts: $21.25/ton (signed late 2024), mid-2025 renegotiations dropped to $0/ton. Smelters now rely solely on byproducts (e.g., sulfuric acid, minor metals) for profits. Further declines in sulfuric acid prices could trigger losses and global refined copper output cuts.
5. **Inventory Imbalance** As of November 27–28, 2025: - Total exchange inventories (LME + COMEX + SHFE): 676k tons (6-year high). - COMEX holds 62% of total inventories due to U.S. tariff expectations, potentially exacerbating shortages elsewhere if supply falters or restocking begins.
**Investment Recommendations**: Buy recommendations for Zijin Mining, CMOC Group, Western Mining, and JCHX Mining; monitor Tongling Nonferrous, Jiangxi Copper, and Yunnan Copper.
**Risks**: Policy delays, slower-than-expected capacity phase-outs, and demand weakness.
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