Chile's copper production fell 5.2% year-on-year in May, driven by ongoing water shortages in the Atacama region and a three-week strike at Codelco's El Teniente division. Combined global copper inventories across LME, COMEX, and SHFE warehouses now stand at 215,000 tonnes — the lowest level since April 2024 and 38% below the five-year average for this time of year.
The concentrate market has reached an inflection point. Spot treatment charges (TCs) remain anchored near zero dollars per tonne, with some Chinese smelters reporting negative TC offers as they compete for dwindling feedstock. Smelter utilization rates in China dropped to 72% in May, down from 78% in April, as TC/RC compression erodes processing margins.
On the demand side, US import data shows refined copper arrivals surged 12% in May as buyers accelerated shipments ahead of potential Section 232 tariffs on copper imports. The Commerce Department is expected to release its Section 232 national security investigation findings by mid-June, with industry analysts split on whether the administration will impose a 10-15% tariff.
Chinese physical demand remains cautious at these price levels. Traders report that bids on the Shanghai Yangshan premium have retreated to $58/mt, down from $72/mt in late May, suggesting domestic buyers are waiting for price dips to restock. The Yangshan premium typically widens when Chinese import demand strengthens.
With concentrate availability at crisis levels and inventories near multi-year lows, spot copper procurement requires longer lead times and alternative pricing mechanisms. Consider fixed-price contracts for H2 2026 delivery to lock in current levels, as analysts at Goldman Sachs project LME copper will average $14,500/mt in Q4 2026. Monitor the Section 232 ruling as a potential catalyst for a sharp US market premium.