Normally, September is considered peak season for copper production in China – but this year, things are different. For the first time since 2016, figures indicate a decline. Analysts expect a decrease of around 4 to 5 percent compared to August.
Reasons for the Decline
The main trigger is new tax regulations that make the smelting of scrap copper less attractive. This leads to a shortage of copper anodes, which are indispensable for further processing in refineries. Additionally, five smelters are shut down in September for maintenance – two more than in the previous month. Normally, refineries could resort to anodes from other sources during such phases. However, there is currently a shortage there too, which further burdens production. According to data from the Shanghai Metals Market, the utilization rate of the affected smelters in September drops to an average of just under 60 percent – a significant decline.
Impact on the Market and Copper Prices
Particularly critical: The production slowdown comes precisely at a time when demand is traditionally high. Copper is heavily needed in China for construction, energy supply, and mechanical engineering. The reduced supply could therefore support prices. Prices are also supported by hopes of a US Federal Reserve interest rate cut, which would make raw materials more attractive to investors.
The development is also significant for global negotiations between smelters and mine operators. Due to the reduced demand for copper concentrate during maintenance, the processing fees, which have recently fallen sharply, could be somewhat stabilized. When Chinese smelters discuss the terms for 2026 with mining companies in November, they could approach the table from a stronger position.
Even if the decline is noticeable in September and likely also in October, China is still expected to achieve a new production record for the full year. For the market, this means short-term tailwinds for prices; long-term, the high volatility of the red metal is likely to persist.
