Chilean miner Antofagasta and several major Chinese copper smelters concluded negotiations for their mid-year 2026 long-term copper concentrate contracts on July 1, adopting spot index-linked pricing as the contingency plan for the first time.
According to market sources, Antofagasta continued to advocate for an index-linked pricing mechanism during the negotiations, while Chinese smelters remained committed to the conventional fixed treatment and refining charge (TC/RC) model. After several rounds of discussions, the two sides reached a compromise by adopting the spot index-linked pricing as fallback, balancing the commercial interests of both miners and smelters against the backdrop of spot TC/RCs remaining at historically low levels.
The traditional fixed benchmark pricing has become increasingly difficult to align with prevailing market conditions, as spot TC/RCs have been sharply declining recently. Mysteel's spot TC index reached -$125/dmt as of June 26, while the copper concentrate annual contract TC/RC benchmark was set at $0/dmt and ¢0/lb for 2026, indicating severe deviation. The contingency pricing mechanism therefore provides greater flexibility for both parties while avoiding the need to commit to a benchmark level that may quickly become outdated.
Nevertheless, the arrangement is widely viewed as a temporary measure rather than the beginning of a new pricing framework. Industry sources expect that negotiations for next year's benchmark contracts, scheduled to begin later this year, will continue to focus on establishing a fixed annual TC/RC benchmark, with both miners and smelters seeking a return to the traditional pricing model.
Looking ahead, the evolution of long-term copper concentrate pricing will largely depend on developments in the global concentrate market, including the pace of new mine supply growth, the balance between concentrate supply and smelting capacity, and global copper consumption. Unless market fundamentals improve significantly, discussions over whether the industry should retain the traditional benchmark system or move toward more market-responsive pricing mechanisms are likely to remain a key issue in future negotiations.
Written by Mingyuan Wang, wangmingyuan@mysteel.com
