Anticipated Decrease in China's Copper Production in September 2025

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The copper market is currently grappling with a series of structural challenges, with the slowdown in mined supply growth creating persistent shortages throughout the value chain. This issue is not solely attributed to China's production problems.

Recent developments have seen port inventories of copper concentrate drop to around 560,000 tons, falling below the typical levels required to maintain smooth operations during maintenance periods. Monthly variations in production appear unlikely to derail the overall growth trajectory, as year-to-date production has significantly exceeded 2024 levels.

The primary driver behind the production decline is the implementation of tax regulations that have fundamentally altered the economics of copper scrap processing. Contrary to popular belief, China has not announced specific tax changes directly targeting copper recovery from scrap. However, broader Chinese export controls and policies on rare earths and materials have caused price increases in industrial metals, implying tighter resource management. This could indirectly encourage recycling like copper recovery from scrap.

A startup example of copper recycling is ScrapBees, which uses digital platforms to efficiently collect and recycle scrap metals. However, this is a private initiative rather than a direct consequence of Chinese tax policy changes.

Despite the monthly decline in September 2025, China's annual copper production is still projected to set new records in 2025. The number of smelters undergoing scheduled maintenance is increasing significantly this September, creating substantial gaps in production capacity. Year-on-year figures still show an 11.42% increase, indicating the overall strength of China's copper industry.

Operating rates among scrap-fed smelters are expected to fall by 8.3 percentage points to 59.9%, and the production decline could influence processing fee negotiations. Anode copper supplies are unusually tight, limiting refiners' ability to maintain production. China's refined copper production is forecasted to decrease by 4-5% in September 2025 compared to August levels, marking a significant deviation from typical production patterns and the first September decline since 2016.

Changes to tax regulations affecting scrap copper economics would provide immediate signals about potential market normalization timelines. The Chinese government may consider interventions if the production decline threatens industrial supply chains, potentially creating opportunities for copper & uranium investment as markets adjust.

It is worth noting that some smelters outside China have already paused operations due to concentrate shortages, highlighting the global nature of the current market tightness. Maintenance completion timelines at major smelting facilities will determine when production capacity returns to normal levels. Copper concentrate import volumes and port inventory levels will indicate the ability of the industry to restore normal production patterns.

Several new facilities are scheduled to come online in late 2025 and early 2026, expanding production capacity. The new tax rules have significantly reduced profitability margins for converting scrap copper into anodes, and the projected reduction of approximately 52,500 metric tons month-on-month represents a 4.48% decrease.

In conclusion, the copper market is facing significant challenges due to a combination of factors, including tax regulations and maintenance schedules. However, the industry remains resilient, with new facilities coming online to help alleviate the current tightness in the market.