During mid-year negotiations for long-term copper concentrate contracts, Chilean miner Antofagasta proposed replacing the traditional fixed treatment and refining charge (TC/RC) pattern with a floating pricing mechanism linked to the spot TC index, which has been widely rejected by Chinese copper smelters, according to market sources on June 29. The proposal highlights growing disagreements over the future of the annual benchmark TC/RC system, which has faced mounting challenges as spot market dynamics increasingly diverge from fixed annual contract terms.
The copper concentrate annual contract TC/RC benchmark was set at $0/dmt and ¢0/lb for 2026. However, spot TCs have been sharply falling entering 2026 due to the shortage of copper concentrate supply and continued expansion in global smelting capacity. With Mysteel's spot TC index falling to a record low of -$125/tonne as of June 26, smelters argued that tying long-term contracts to spot prices would further squeeze already thin profits.
For decades, the annual benchmark TC/RC has formed the foundation of long-term cooperation between miners and smelters, providing greater cost visibility for smelters while supporting stable raw material procurement and production planning. Market participants generally believe that replacing the benchmark with spot index pricing would shift pricing power further toward miners under current tight market conditions.
As one of the leading participants in annual benchmark negotiations, Antofagasta's moving to a floating pricing mechanism would allow the company to better reflect prevailing market conditions in contract pricing and reduce its exposure to fixed benchmark terms during periods of exceptionally weak spot TCs. Market participants are closely watching whether other major miners will follow Antofagasta's lead in proposing alternative pricing mechanisms during contract negotiations. Meanwhile, China accounts for the majority of global copper smelting capacity, making the stance of Chinese smelters critical to any fundamental changes in long-term contract pricing.
Additionally, market participants noted that some traders have increasingly diverted copper concentrate cargoes to the spot market since the beginning of 2026, where flexible pricing has offered more attractive returns. This trend has further weakened the influence of the traditional annual benchmark system and added momentum to discussions over alternative pricing mechanisms. Overall, developments of the mid-year negotiation for long-term copper concentrate contracts need close attention.
Written by Mingyuan Wang, wangmingyuan@mysteel.com
