China’s Copper Industry Defies Odds: Record Output Despite Smelting Crisis

In an unexpected turn of events, China’s copper smelters achieved a record high in production this March, defying some of the toughest financial conditions in years. The industry, already grappling with a global shortage of copper ore, managed to thrive through clever adaptations and a boost from rising prices of unexpected by-products.

A Record High Amidst a Crisis

China, the world’s largest copper producer, saw its smelters produce unprecedented volumes of refined copper in March 2025. What makes this achievement remarkable is that it occurred while smelting fees—the payments processors earn for refining raw ore—plunged below zero. Essentially, smelters were paying to process copper rather than profiting from it.

This situation arose from a global copper ore shortage, which forced smelters to compete for scarce raw materials. Earlier this year, some major Chinese producers even reduced output temporarily to avoid deeper losses. Yet, by March, the industry had rebounded, demonstrating its resilience in the face of adversity.

How Did They Do It? The By-Product Boost

One key factor kept smelters afloat: soaring prices of by-products like gold and sulphuric acid. As copper refining became less profitable, these secondary revenue streams turned into financial lifelines.

Gold prices have been on a relentless rally, adding unexpected income to smelters’ balance sheets. Meanwhile, sulphuric acid—a by-product of copper smelting—found strong demand in industries ranging from fertilizers to chemicals. This dual windfall helped offset losses from copper processing, enabling smelters to maintain full production capacity.

The Bigger Picture: A Fragile Balance

While the record output is impressive, it does not eliminate the underlying challenges. The copper industry is navigating a delicate balance—expanding production capacity while ore supplies dwindle. Analysts tracking Bloomberg’s smelting fee index note that the current crisis is far from resolved.

What comes next? If ore supplies do not improve, smelters may face even tougher decisions. Some industry experts suggest further production cuts could be inevitable unless market conditions stabilize.

Final Thoughts: A Story of Adaptation

China’s copper smelters have demonstrated remarkable adaptability, leveraging by-products to remain profitable in a challenging market. However, their success also underscores a precarious reality—the global copper supply chain is under significant strain, and long-term solutions are urgently needed.

For now, the industry’s ability to pivot and push forward is a testament to its resilience. Whether this momentum can be sustained remains uncertain, but one thing is clear: China’s copper sector is not backing down without a fight.

Source: Bloomberg Terminal data and industry reports.