Copper has surpassed $9,000 per ton, its highest level in 11 months, anticipating global supply issues.

Prices surged this week after Chinese smelters held a crisis meeting on how to cope with a sharp drop in treatment charges, the fees charged by smelters to convert mining concentrates into metal. Spot fees in China fell to $11.20 per ton last week, a drop of nearly 76% in just two months and the lowest since 2013.

Investors are increasingly accepting that the worst of a global slowdown is over, especially for metals like copper, which are increasingly used in electric vehicles and renewable energy.

This year, a market deficit is expected for both concentrates and refined metal, with a drop in smelter production following another disappointing year of mining supply.

The unexpected tightening of the global copper market is mainly due to the closure last year of First Quantum’s Cobre Panama mine, which dug a 350,000-tonne hole in the copper supply chain to China. Concerns are also growing about production in Zambia, which faces El Niño-induced phenomena, and a power crisis is also worrisome.

Refined copper production worldwide could increase by 2.1% this year, a figure lower than initial forecasts. The refined copper market experienced a significant deficit of 461,000 tonnes in 2022.
Funds are also making bullish bets on copper as global mining supply tightens and Chinese demand slowly rebounds.