Theme of the Day: Chinese refined copper production set to reach a record this year

Chinese smelters have maintained remarkably high production levels throughout early 2025, but this expansion appears increasingly unsustainable as feedstock constraints worsen. Chinese copper refiners, who collectively account for over 50% of global refined copper production, have achieved consecutive monthly production records in H125. Analysts estimate that the refined copper production in China will increase between 7.5% to 12% and surpass the record of 13,64Mt set last year.However, this output expansion has occurred despite deteriorating market conditions, creating what industry experts describe as an increasingly untenable situation. The economics of smelting have been crushed by shortages of both mined ore, which is turned into concentrate, and its replacement feedstock, copper scrap.H125 witnessed Chinese smelters achieving a succession of record highs in recent months, according to industry data, with Jul marking the peak output level - refined output grew by 9.5% during H125. What makes this expansion particularly remarkable is that it has occurred while defying tight feedstock markets and cratering profitability – a situation that appears increasingly difficult to maintain. Port inventories of copper concentrate have fallen to approximately 560kt, representing the lowest level recorded this year. This depletion of essential raw materials signals that production adjustments may be unavoidable in the coming months, regardless of strategic or economic priorities.The unprecedented expansion of Chinese smelting capacity has created a fundamental imbalance in the supply chain, with global copper supply forecast failing to keep pace with China's growing appetite for copper concentrate. This mismatch has resulted in critical feedstock shortages that threaten production sustainability. Some overseas rivals, which lack the state backing enjoyed by many Chinese operators, have already begun to curtail production, industry sources note, highlighting how Chinese smelters have thus far proven more resilient to challenging market conditions than their international counterparts.Chinese smelters have continued high production levels despite poor economics due to several factors: State backing for many operators provides financial cushioning, strategic importance of maintaining market share and supply chain presence, contractual obligations to downstream customers, high fixed costs and technical challenges associated with stopping and restarting production processes, historical expectations of government support during challenging market conditions.