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China’s copper importers are reining in the amount of tonnage they buy through annual supply negotiations, once a bellwether for the global metal market, and opting for spot supplies instead.
For 2025, buyers in China will take less refined metal under yearly contracts than they did this year, including from producers like Chilean copper giant Codelco, according to six traders with direct knowledge of talks on the sidelines of a major industry event in Shanghai.
The shift in buying patterns comes as Chinese demand for copper falters after a decades-long boom. The Asian nation has also boosted its own domestic capacity, capping the need for imports.
Premiums in the spot market for imported copper collapsed below zero earlier this year, hurting buyers who agreed annual fees at Asia Copper Week last year at $89 a ton. The premium is a surcharge paid on top of London Metal Exchange prices by Chinese traders and fabricators.
“Many of our clients and peers lost big money this year from the terms they signed. No one believes the spot premium will increase a lot for the next year,” Ni Hongyan, vice general manager of Singapore-registered Eagle Metal International Pte., said in an interview in Shanghai.
That view tallies with executives from other trading houses in the world’s top commodities market. Both private and state-owned firms will take similar approaches to weather low margins, they said. Most of the executives asked not to be identified as they aren’t authorized to speak publicly.
Codelco didn’t immediately respond to a request for comment.
Talks in Shanghai to decide annual premiums and volumes have been a closely watched ritual in the copper market since earlier this century, when China’s rapidly expanding economy turned it into the dominant importer of commodities including copper.
But the significance of the annual premium — set by Codelco’s deals with major customers — has already waned, and this year appears to be a watershed moment. Codelco has offered a premium at $89 a ton this week, the same as last year, the traders said. That’s higher than current spot levels near $50 and far above traders’ expectations for annual deals, they said.
The future of China’s copper industry after years of spectacular expansion in output and demand has dominated discussions at seminars, cocktails and negotiations in Shanghai.
Consumption will grow at 2.9% next year, down from 4.2% in 2024 as the real estate crunch offsets hotspots including renewable energy, researcher CRU Group said. Without greater government stimulus, demand is unlikely to recover significantly, according to Eagle Metal.
China has seen a dramatic acceleration of smelter construction in the past two years. That means there’s ample domestic supply and much greater reliance on imported ore, instead of metal shipped from the likes of Codelco. Imports of refined copper this year are barely higher than a decade ago.
The reduction in annual contracts may lead to greater uncertainty for major overseas copper miners as less profits are guaranteed with floating prices. Codelco may itself be trying to diversify its markets away from China to places including the US, the traders said.
For buyers though, there is the risk that greater reliance on the spot market leaves them exposed to any potential market reversal that could trigger a rebound for premiums.
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