The global copper concentrate market is experiencing its most severe tightness in decades, with treatment and refining charges (TC/RCs) at record lows that have pushed some smelters below breakeven. The International Copper Study Group (ICSG) has revised its 2026 balance from a modest surplus to a deficit of 150,000-200,000 tonnes, while some analysts see a shortfall as large as 600,000 tonnes when fully accounting for disruptions.
The epicenter of the supply crisis is Indonesia, where Freeport-McMoRan's Grasberg mine — contributing approximately 4% of global copper supply — declared force majeure after a mud rush incident in September 2025. The phased restart is expected to begin in H1 2026, with only three production blocks operational initially. Full recovery of the Grasberg block cave (PB1C) is not expected until 2027.
In Chile, output fell by approximately 210,000 tonnes in 2025 versus 2024, driven by declining ore grades at mature mines and operational setbacks. A rock burst at El Teniente caused 48,000 tonnes of lost production in 2025 and an estimated 25,000 tonnes in 2026. Blockades at Escondida and waste-storage issues at Quebrada Blanca compounded the shortfall.
Global mine supply growth for 2026 is now estimated at only +1.4% — far below earlier expectations. Declining ore grades, rising capex intensity for new projects, and slow permitting timelines are structural constraints that analysts expect to persist through the decade.
On the demand side, refined usage growth is projected at approximately 2.1% in 2026, adding roughly 500,000 tonnes of additional demand. AI data center construction, electrical grid modernization, and EV production are the primary drivers. China's property sector remains weak, but grid and renewables investment is partially offsetting the construction drag.
The concentrate squeeze is now transmitting to refined metal availability. Procurement teams should expect higher regional premiums, particularly in Europe and Asia where ex-US inventory is tightening. Extend supply contract durations where possible — spot purchases carry escalating premium risk. Lock in Q3-Q4 concentrate or cathode volumes now, as further smelter cutbacks in Japan and China could reduce global refined output by 200,000-300,000 tonnes in H2 2026.