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What went up fast is now coming down faster.
Copper for March delivery slid more than 3% on Thursday to settle at $12,740 a tonne in New York, extending a pullback that has now erased 12% from the all-time high of $13,387 hit just two weeks ago. The rally—fueled by supply shocks, tariff jitters, and AI euphoria—is rapidly cooling.
Global copper smelting activity slumped to its lowest January level in nearly a decade, according to satellite monitoring firm Earth-i and its SAVANT Global Copper Smelting Index. Fully 14.3% of worldwide smelting capacity sat idle last month—the first double-digit January inactivity rate in seven years and 6.8 percentage points above the three-year average.
But the headline number masks a deeply fractured global picture.
China is the outlier. Its smelters, backed by local government support, kept idling capacity at just 7.5%. Outside China, the story is one of forced retrenchment: active smelting tonnage plunged 1.2 million tonnes year-on-year.
Asia and Oceania accounted for more than 850,000 tonnes of that decline. The Philippines’ Isabel Leyte (PASAR) smelter has shut; Indonesia’s Gresik and Manyar plants remain offline following the September mud-rush disruption at Grasberg mine. South America shed over 100,000 tonnes, with Chile’s Salvador (Potrerillos) still dark after a chimney collapse in June 2025. Africa suffered the sharpest relative deterioration: its idled capacity rate jumped 12.9 percentage points to 28.4% in January. The continent’s only bright spot: first operating signals from the 500,000-tonne-per-year Kamoa-Kakula smelter in the DRC, still ramping up but set to lift Africa’s active tonnage to 1.45 million tonnes.
The industry-wide pullback has one root cause: processing fees have collapsed into negative territory.
Spot treatment and refining charges (TCRCs)—the fees miners pay smelters to convert concentrate into refined copper—recently tendered at –$45 per tonne and –4.5¢ per lb. The annual benchmark market followed suit: Antofagasta and a Chinese smelter agreed on zero-dollar terms for 2026, the lowest annual TC/RC on record.
At these levels, every tonne of concentrate processed is a money-losing proposition. Outside China, the rational response is to cut output.
Goldman Sachs Research cites three narratives that lifted copper to record highs:
All three are now exhausted, according to analyst Eoin Dinsmore.
“We are very likely in the late stages of this rally,” he wrote. The US accounts for just 7% of global copper consumption—too small for the AI story to move the demand needle. Stockpiling, meanwhile, is a temporary arbitrage trade, not a structural shift.
Goldman Sachs’ base case: the Trump administration will announce a 15% tariff on refined copper by mid-2026. That will end US inventory builds and clear the path for lower prices. If the tariff decision slips to 2027, the correction will come sooner—markets will refocus on global oversupply well before then.
The global copper market recorded a 600,000-tonne surplus in 2025—the largest absolute glut since 2009. Inventories outside the US are already rising. Chinese refined copper consumption has weakened markedly, a deeper pullback than the 2024 “buyers’ strike” that killed that year’s rally. High prices are also crimping demand and lifting scrap supply.
Goldman Sachs Research now expects a 300,000-tonne surplus in 2026, up from a prior forecast of 160,000 tonnes.
The firm estimates fundamental fair value at $11,500 per tonne—nearly 10% below current levels. Its fourth-quarter 2026 price target is $11,200, essentially in line with fair value.
“The price has overshot its fair fundamental level,” Dinsmore concluded. Near-term support—US growth, AI spending, continued stockpiling—merely delays the inevitable. “A clear decision on US refined copper tariffs will serve as the catalyst for a correction. ”
Don’t chase the rally.
