Stock image.
Copper prices experienced a rise through 2025, albeit with significant fluctuations, largely impacted by supply disruptions in Indonesia and South America resulting from tariff issues. However, the prices have declined again this year.
On Thursday in New York, copper for March delivery dropped over 3%, settling at $5.78 per pound ($12,740 per tonne), now sitting 12% below the peak reached nearly two weeks ago.
Market uncertainty escalated following satellite data revealing that smelter activity in January reached its lowest recorded level since monitoring began nearly ten years ago.
According to the latest information from Earth-i’s SAVANT World Copper Smelting Index, 14.3% of global smelting capacity was offline in January. This marks a 2.5% decrease from December, a notable drop during a period typically bustling for the industry.
This situation is also the first instance in seven years where January’s inactivity rate has hit double digits, now 6.8% higher than the three-year average. Earth-i’s satellites monitor about 95% of global capacity.
While global figures present an overarching picture, they mask significant regional disparities. China, which makes up 45% of the smelting capacity tracked by SAVANT, reported a relatively low idle capacity of only 7.5%.
Outside of China, effective tonnage is down by 1.2 million tonnes year-over-year, highlighting the severity of the economic slowdown in other regions.
The steepest decline has been in Asia and Oceania, which contributed to over 850,000 tonnes of the drop, despite a month-on-month increase seen in December—the only region to record such growth.
This region is grappling with major disruptions, including the closure of the Isabel Leyte (PASAR) smelter in the Philippines and the suspension of the Gresik and Manyar smelters in Indonesia. Additionally, debris flows at the Grasberg mine in September have curtailed operations in Indonesia, leading to the plant closures.
South America and Europe both noted declines of over 100,000 tonnes in effective tonnage. In South America, much of this decline stems from ongoing issues at Salvador (Potrellillos), Chile, where operations remain suspended after a chimney collapse in June 2025.
Conversely, Africa saw the most significant downturn in January, with the inactive capacity rate soaring from 12.9% to 28.4%. Despite this, there was a glimmer of hope with the first operational signals from the Kamoa Kakula smelter in the Democratic Republic of the Congo, which has a capacity of 500,000 tonnes per year.
While still ramping up and not yet included in the Earth-i index, this addition could eventually elevate Africa’s active smelting tonnage to around 1.45 million tonnes.
The unprecedented decline in global smelter activity is closely tied to an extraordinary fall in processing and refining charges (TCRCs). These are the fees miners pay smelters to process concentrated copper into refined form.
With tight concentrate supplies due to mining disruptions, many smelters that expanded significantly following China’s growth are now forced to compete fiercely for raw materials.
This has pushed spot TCRCs into deep negative figures, with recent market bids hitting -$45 per tonne and -4.5 cents per pound. Similarly, the benchmark annual contract market has seen declines; for instance, Antofagasta’s 2026 benchmark contract with a Chinese smelter was settled at $0.00, representing the lowest annual TCRC levels on record.
Such situations effectively eliminate processing margins for smelters, explaining why many outside China are curtailing production. In contrast, China’s industry faces less pressure from market forces, with many refiners and smelters benefiting from local government support, enabling continued operation even in adverse margin conditions.
