As copper prices approach record highs, the value of the metal to copper smelters has collapsed due to an unprecedented decline in treatment and refining charges.

Companies that convert mined copper concentrates into refined metal are now increasingly dependent on by-products generated during the processing stage to maintain financial viability.

Secondary products such as gold, silver, and sulfuric acid have become nearly as important as copper itself in determining profitability for most smelters.

This unusual situation stems from China’s expansion of copper smelting capacity at a pace far exceeding the ability of global mines to supply raw materials.

The imbalance is unlikely to disappear anytime soon. Mine production remains constrained, and despite discussions about cutting Chinese smelter output, the country’s refined copper production continues to rise.

The shift carries major implications for the copper concentrate market and the future structure of global metals production.

Treatment charges fall to zero

Annual benchmark copper treatment and refining charges fell from $80 per metric ton and 8 cents per pound in 2024 to $21.25 per ton and 2.125 cents per pound in 2025, before effectively dropping to zero this year.

Spot treatment charges have remained negative for several months, meaning smelters are effectively paying mining companies for the right to process copper concentrates.

As a result, headline treatment charges have become less relevant, while the value of precious metals contained within concentrates and sulfur that can be extracted and converted into sulfuric acid has become increasingly important.

Higher gold and silver prices have helped offset the loss of one of the smelting industry's primary revenue streams.

Sulfuric acid has provided even greater support, particularly after disruptions to Gulf supplies caused by the war with Iran and the closure of the Strait of Hormuz.

Some Chinese smelters have even begun processing larger volumes of pyrite, commonly known as “fool’s gold,” simply to benefit from its higher sulfur content.

Consultancy CRU estimates that treatment charges accounted for 39% of total smelter revenue in 2018. Last year, however, the largest revenue sources became “free metal” gains and by-product credits, particularly sulfur, contributing roughly 50%–53% and 25%–27% of revenues, respectively.

“Free metal” refers to the difference between the payable metal content in raw materials and the actual recovery rate achieved by smelters for copper and other metals.

Has the era of benchmark pricing ended?

What makes this transformation in the copper smelting industry particularly remarkable is how quickly it has occurred.

The shift reflects both the speed and scale of China’s investment in processing capacity.

China’s refined copper output rose 8% year over year to 14.72 million metric tons in 2025, while global mine production increased by only 1%, according to the International Copper Study Group.

China’s Copper Smelters Purchase Team (CSPT), which includes the country’s largest producers, agreed in November to cut production by 10% this year in an effort to stop the collapse in treatment charges.

However, actual output increased 7.4% year over year between January and April 2026, according to China’s National Bureau of Statistics.

The rapid changes in the copper concentrate market have prompted participants to reconsider the industry’s reliance on annual benchmark agreements for pricing.

Chilean mining company Antofagasta has proposed shifting toward spot-market index pricing during its mid-year negotiations with Chinese smelters.

CSPT is expected to oppose the change, but without meaningful cuts to Chinese production, the gap between annual benchmark prices and spot-market realities is likely to widen further.

Only the strongest will survive

The key question now is whether the current smelter business model can remain sustainable over the medium term.

For smelters equipped with modern technology, strong precious-metal recovery capabilities, and established sulfuric acid sales agreements, the answer is likely yes.

CRU said the collapse in treatment charges has been “painful on paper but manageable in practice” for these operations.

However, the consultancy warned that the outlook is “far darker” for facilities with aging infrastructure, high fixed costs, or geographical disadvantages that make sulfuric acid marketing more difficult.

These smelters remain more dependent on treatment charges because they lack the competitive advantages enjoyed by newer facilities.

Many of these plants are located outside China, posing an additional threat to Western copper supply chains that are already under pressure.

Glencore has already placed its smelter in the Philippines into care-and-maintenance mode and only committed to maintaining operations at its Australian facilities after receiving a financial support package worth A$600 million (US$395 million) from federal and state governments.

Meanwhile, China accounted for roughly half of global refined copper production in 2025, compared with just 15% in 2005, and is expected to expand its share further this year.

Chinese smelters appear to understand that they are engaged in a battle in which only the most efficient and competitive operators will survive.

For the West, the challenge is that its smelting sector could become one of the biggest casualties of China’s fierce competition for raw materials and revenue streams in a copper concentrate market already suffering from a structural supply shortage.

Bitcoin reclaimed the $60,000 level on Monday after falling nearly 6% and closing below the key technical threshold during the previous session.

The modest recovery came as investor risk appetite improved following an agreement between the United States and Iran to halt recent attacks and resume negotiations over the Strait of Hormuz, providing support for the broader cryptocurrency market.

However, institutional selling continued to weigh on the world's largest cryptocurrency by market capitalization after spot Bitcoin exchange-traded funds recorded net outflows of $1.79 billion last week, the largest weekly withdrawal since late February.

US-Iran agreement eases pressure on risk assets

The United States and Iran agreed to halt recent hostilities in the Gulf and resume discussions regarding the dispute over the Strait of Hormuz, according to Reuters.

The development provided a modest boost to market sentiment, renewing hopes that a temporary peace agreement could be preserved after several days of retaliatory strikes had threatened its stability.

The easing of geopolitical tensions helped support risk-sensitive assets, allowing Bitcoin to reclaim the $60,000 level on Monday after a sharp selloff during the previous week.

Even so, investors remain cautious as geopolitical uncertainty remains elevated. Any breakdown in negotiations or renewed military escalation between the two countries could weaken risk appetite and trigger another wave of selling in Bitcoin.

Institutional selling limits Bitcoin's rebound

Institutional demand for Bitcoin remained weak last week, with spot Bitcoin ETFs recording net outflows of $1.70 billion, marking the largest weekly withdrawal since late February.

Last week also marked the seventh consecutive week of outflows from Bitcoin ETFs, the longest streak of withdrawals since the launch of the products.

On a monthly basis, Bitcoin ETFs recorded approximately $4.06 billion in net outflows during June, marking a second consecutive month of withdrawals and the largest monthly outflow since the funds were introduced.

The data points to continued weakness in institutional demand and suggests that large investors have so far been unable to provide sufficient support for Bitcoin prices.

Should this trend continue during the current week, Bitcoin could face additional downside pressure despite the recent recovery.

Oil prices were little changed on Monday after Iran and the United States agreed to halt recent hostilities in the Gulf and across the Middle East, while regional producers continued loading oil and liquefied natural gas cargoes despite fresh attacks on vessels.

The two countries also agreed to resume talks regarding the Strait of Hormuz, boosting hopes of preserving a temporary peace agreement that had come under strain following several days of retaliatory strikes between the two sides.

Brent crude futures for August delivery rose 4 cents to $72.03 a barrel by 08:03 GMT, while US West Texas Intermediate crude futures for August gained 44 cents, or 0.6%, to $69.67 a barrel.

ING analysts said in a note on Monday: “There are still numerous risks facing the oil market. However, participants appear focused on what the continued recovery in oil flows means for the global supply-demand balance.”

They added: “This sense of comfort seems unusual and leaves significant upside risk if the recovery in supplies slows.”

Brent crude fell 10.6% last week, marking its third consecutive weekly decline, after oil shipments through the Strait of Hormuz climbed to their highest levels since the outbreak of the US-Israel conflict with Iran in late February.

Shipping data showed that Middle Eastern producers continue to load crude oil and LNG cargoes despite fresh vessel attacks in the Strait of Hormuz and renewed military exchanges between the United States and Iran in recent days.

Saudi Aramco resumed crude oil loadings on Friday from its Ras Tanura terminal, located west of the Strait of Hormuz, after a shutdown that lasted nearly four months.

Loading operations continued despite the crash of a company helicopter on Sunday in Ras Tanura, which resulted in the deaths of 14 Saudi nationals. The cause of the accident has not yet been determined.

Silver prices lost nearly 3% in European trading on Monday, beginning the new week on a negative note as the metal resumed losses after a two-day rebound and moved closer once again to seven-month lows. The decline was partially limited by a weaker US dollar following the agreement between the United States and Iran to halt hostilities and resume technical negotiations.

As markets reassess expectations for the path of US interest rates this year, investors are closely watching comments from Federal Reserve Chair Kevin Warsh at the European Central Bank Forum, along with a series of key US labor market reports scheduled for release this week.

The Price

• Silver prices today: Silver fell around 3.0% to $57.42 an ounce, from an opening level of $59.15, after reaching an intraday high of $59.48.

• At Friday’s settlement, silver gained 2.2%, marking a second consecutive daily advance as it continued to recover from a seven-month low of $55.62 an ounce.

• The white metal lost 8.8% last week, posting a second consecutive weekly decline amid pressure from a stronger US dollar and rising Treasury yields driven by the Federal Reserve’s hawkish stance.

US dollar

The US Dollar Index fell more than 0.2% on Monday, extending losses for a third straight session and reflecting continued weakness in the US currency against a basket of global currencies.

The decline comes as military tensions between the United States and Iran eased in the Strait of Hormuz, with both sides agreeing to resume technical negotiations under the previously established 60-day roadmap.

Iran war developments

• The United States and Iran have halted hostilities, while shipping traffic through the Strait of Hormuz has resumed following weekend clashes.

• The United States carried out strikes against Iranian targets in response to attacks by Iran’s Revolutionary Guard on vessels in the Strait of Hormuz.

• Gulf states condemned Iranian missile and drone attacks on Bahrain and Kuwait.

• Israel announced that it had resumed attacks on Hezbollah positions in southern Lebanon.

• Technical negotiations are scheduled to resume on Tuesday in Doha, with both sides focusing on disputes related to the Strait of Hormuz, particularly freedom of navigation and the management framework for the maritime corridor.

European Central Bank Forum

Markets are closely watching this week’s annual European Central Bank Forum in Sintra, Portugal, as investors reassess the outlook for global monetary policy amid lower oil prices and continued volatility in equity markets.

ECB President Christine Lagarde will open the forum on Monday with a keynote speech, while a high-level panel discussion is scheduled for Wednesday featuring Federal Reserve Chair Kevin Warsh alongside several major central bank governors.

US interest rates

• According to CME Group’s FedWatch Tool, markets currently price a 70% probability that the Federal Reserve will leave interest rates unchanged at its July meeting, while the probability of a 25-basis-point hike stands at 30%.

• Markets also assign a 20% probability that rates will remain unchanged through December, while the probability of a 25-basis-point increase stands at 80%.

• Investors will continue monitoring incoming US economic data and comments from Federal Reserve officials to reassess those expectations.

• A series of highly important US labor market reports will be released this week. Job openings data for May will be published on Tuesday, followed by the ADP private employment report for June on Wednesday. Weekly jobless claims and the official June employment report are both due on Thursday.