China Strategic Minerals Framework Tightens State Control Over 36 Resources

Strategic Minerals

China strategic minerals policy has entered a more formal phase after Beijing placed 36 mineral resources under tighter central government control. The revised regulations strengthen state oversight of mining, exploration, production quotas and strategic reserves.

China strategic minerals covered by the framework include major industrial metals, battery materials, rare earths, semiconductor metals and energy resources. The rules also include non-metallic materials such as graphite, phosphate, fluorite and high-purity quartz.

China strategic minerals regulation is significant because many of the affected materials are essential to batteries, aerospace, defence, semiconductors, energy infrastructure and advanced manufacturing.

The immediate market impact has been limited because several controls already existed in practice. However, formalising them under a single legal framework could strengthen Beijing's ability to manage supply over the longer term.

Centralised Quotas and Reserves Strengthen Supply Management

The Ministry of Natural Resources, working with the National Development and Reform Commission, will set annual mining quotas for strategic minerals.

The objective is to prevent uncontrolled production while giving central authorities greater control over national resource development.

Approvals for new exploration and mining rights will also be consolidated at the central level. Authorities will restrict the number of mining licences granted for individual deposits.

This could slow uncontrolled capacity growth in some markets while giving Beijing more influence over production timing and regional development.

The new framework also establishes a three-tier reserve system covering physical product inventories, production capacity and undeveloped resource sites.

State and private companies will jointly participate in stockpiling, while resource-site reserves are expected to remain available for at least five years.

This creates a broader security mechanism than conventional commodity stockpiles. China will not only hold material inventories but also preserve future production capability and undeveloped resources.

For strategically sensitive metals, this could provide Beijing with greater flexibility to respond to supply disruptions, price volatility or geopolitical pressure.

Rare Earths and Semiconductor Metals Gain Greater Strategic Weight

The list covers 25 metallic commodities, including iron, copper, aluminium, titanium, vanadium, manganese and chromium.

Battery materials such as lithium, cobalt and nickel are included alongside all 17 rare earth elements.

China has also designated tungsten, antimony, tin and molybdenum as strategic resources, together with semiconductor and specialty metals including gallium, germanium, indium, rhenium, niobium, tantalum, beryllium, zirconium and hafnium.

This combination is important because China already holds dominant positions across many of these supply chains.

Rare earth separation, tungsten processing, antimony, gallium and germanium are particularly sensitive because alternative global processing capacity remains limited.

The inclusion of high-purity quartz also highlights the expanding definition of strategic materials. Quartz is an important input in semiconductor and solar manufacturing, linking mineral security directly with advanced technology industries.

The framework therefore goes beyond mining policy. It strengthens China's ability to manage the upstream materials required for manufacturing competitiveness and national security.

The Metalnomist Commentary

China is moving from individual export controls and quotas toward a comprehensive strategic resources system. The long-term implication is greater state influence over not only current supply, but also future capacity and undeveloped reserves across many of the world's most critical materials.

Zhongke Anode Projects Cut as Investment Shifts to Oman and Sichuan

Hunan Zhongke Electric

Zhongke anode projects totaling more than 330,000 t/yr will be terminated as Hunan Zhongke Electric concentrates capital on larger developments in Sichuan and Oman. The decision reflects increasingly selective investment across China's rapidly expanding battery anode industry.

Zhongke anode projects being dropped include 130,000 t/yr in Sichuan, 100,000 t/yr in Gansu and 100,000 t/yr in Tangier, Morocco. All three remain at an early stage, limiting the financial impact of cancellation.

Zhongke anode projects are being rationalised despite strong company growth. Anode material sales rose 62% to 363,253t in 2025, while production climbed 66% to 378,469t.

The company will instead prioritise a 300,000 t/yr complex in Luzhou and its first overseas manufacturing project in Sohar, Oman.

Capital Shifts Toward Larger Integrated Anode Hubs

Zhongke has already started construction of the first 200,000 t/yr phase of its Luzhou project. Production is scheduled to begin in the second half of 2027.

A second 100,000 t/yr phase will follow after the first enters operation, creating a combined 300,000 t/yr production base.

The company is also expanding its Zhaotong operation in Yunnan. A third-phase project will add another 100,000 t/yr by the end of 2026.

These investments show that Zhongke is not reducing its overall growth ambitions. Instead, it is concentrating capital in locations where scale, infrastructure and operating economics appear more favourable.

Cancelling early-stage projects also reduces the risk of adding capacity in too many locations at once. China's anode sector has expanded rapidly, increasing pressure on utilisation rates and margins.

Large integrated sites can provide stronger economies of scale in graphitisation, carbonisation and material handling than smaller fragmented facilities.

The strategy therefore represents capacity optimisation rather than a retreat from the battery materials market.

Oman Links Anode Production With Petroleum Coke Supply

Zhongke subsidiary Shinzoom began construction of its first overseas anode project in Sohar, Oman, in May.

The complex is designed for 200,000 t/yr of anode materials. Its first phase will establish graphitisation, screening and carbonisation capacity ahead of larger-scale output planned from the second phase.

Start-up is targeted by the end of 2027.

Oman's location provides an important raw material advantage. The country and wider Middle East have substantial petroleum coke availability, which can support anode feedstock procurement.

This gives Zhongke a potential route to combine regional raw materials with overseas processing capacity outside China.

The decision to cancel the Morocco project while advancing Oman also suggests that feedstock access and project economics are becoming more important in overseas site selection.

For the wider anode market, the restructuring highlights a shift from aggressive capacity announcements toward more disciplined capital allocation. Producers increasingly need secure feedstock, competitive energy and large-scale downstream customers to justify new plants.

The Metalnomist Commentary

Zhongke is not abandoning anode expansion; it is concentrating capacity where feedstock and scale offer stronger economics. Oman is particularly strategic because petroleum coke access could give the company a cost advantage as global anode competition intensifies.

Tianhao Magnesium Alloy Plant Targets NEV and Aerospace Lightweighting Demand

Huizhou Tianhao New Material Technology

Tianhao magnesium alloy plant development has started in Huizhou, Guangdong province, as Chinese manufacturers expand capacity for lightweight materials used in new energy vehicles, electronics and aerospace.

Tianhao magnesium alloy plant is designed to produce 20mn units/yr of magnesium alloy profiles. The company has not disclosed a start-up timeline, but construction began on 4 June.

Tianhao magnesium alloy plant development reflects rising demand for lightweight structural materials across NEVs, consumer electronics, low-altitude aviation and aerospace. Magnesium's low density gives it an advantage where reducing component weight can improve energy efficiency and vehicle performance.

China already dominates global magnesium production and processing, giving domestic manufacturers strong access to metal feedstock and downstream fabrication capabilities.

Lightweighting Drives Magnesium Alloy Demand

Magnesium alloys are increasingly used where manufacturers need lower weight without abandoning metallic structural materials. This is especially relevant to electric vehicles, where reducing vehicle mass can improve driving range and offset battery weight.

Consumer electronics provide another important demand segment. Magnesium alloys can be used in lightweight housings and structural components that require stiffness and dimensional stability.

The low-altitude economy could become a larger growth market. Drones, electric vertical take-off aircraft and other lightweight aviation platforms need materials that can reduce mass while maintaining adequate structural performance.

Aerospace applications add further demand potential, although qualification requirements remain much stricter than in consumer or automotive markets.

China produced 428,400t of magnesium alloy in 2025, up 8% from the previous year. Stronger lightweighting demand and pressure to reduce carbon emissions supported the increase.

The Tianhao project therefore enters a market where both production and downstream applications are expanding.

China Strengthens Its Magnesium Processing Advantage

Global magnesium metal consumption reached around 1.2mn t in 2025. Magnesium alloy production represented the largest end-use segment at roughly 650,000t.

Other major applications included steel desulphurisation, aluminium alloying and metal reduction. However, magnesium alloy demand is expected to grow fastest as transportation and electronics markets seek lighter materials.

Global magnesium alloy consumption could reach 1.39mn t by 2028 if current growth expectations materialise. NEVs, consumer electronics and low-altitude aviation are expected to provide much of that increase.

China is well positioned to capture this growth because it controls a large share of global magnesium metal production and already has extensive alloying and fabrication capacity.

That advantage could deepen as manufacturers move further downstream into profiles, castings and finished components rather than selling primary magnesium alone.

For international buyers, this creates a familiar critical materials challenge. Strong Chinese integration can deliver low costs and scale, but it also increases geographic concentration across the magnesium supply chain.

The Metalnomist Commentary

Tianhao's project shows that magnesium is moving further into high-growth lightweighting applications. China's advantage lies not only in producing magnesium metal, but increasingly in converting it into higher-value components for EVs, electronics and aerospace.

Xingtai VRFB Stack Facility Nears Start-Up as Vanadium Storage Demand Rises

Xingtai Meifan Energy Storage

Xingtai VRFB stack facility is nearing commercial start-up in Hebei province as China expands manufacturing capacity for long-duration energy storage. Xingtai Meifan Energy Storage has invested 1.25bn yuan in the 2GW stack production plant.

Xingtai VRFB stack facility development is strategically important because stack production remains one of the largest cost components in vanadium redox flow battery systems. Large-scale domestic manufacturing could further reduce costs and accelerate deployment.

Xingtai VRFB stack facility preparations are close to completion. Cutting lines for proton exchange membranes and carbon felt have entered trial operation, while installation of key equipment on the automated stack production line is in its final stage.

The plant could begin operations around the end of June, adding significant new capacity to China's already fast-growing VRFB manufacturing base.

Localised Stack Production Reduces VRFB Costs

VRFB system economics depend heavily on electrolyte and stack costs. Electrolyte accounts for around 50% of total system cost, stacks for about 30% and other components for the remaining 20%.

Historically, stack costs represented as much as 40% of total system expenditure. Greater localisation and scale in separators, bipolar plates, carbon felt and other core components have gradually reduced that share.

Xingtai Meifan's new facility reinforces this trend. Automated manufacturing and domestic sourcing can lower unit costs while improving consistency and production speed.

China has already developed a fully localised VRFB stack supply chain. Commercial deployment of 100kW-class stacks and the expansion of large energy storage projects are helping the sector move toward industrial-scale production.

This is important because VRFBs compete differently from lithium-ion batteries. They offer long cycle life, high safety and the ability to scale energy capacity separately from power capacity.

These characteristics make VRFBs particularly attractive for grid applications requiring long-duration storage rather than short-duration peak balancing.

Vanadium Demand Gains New Structural Support

Growth in VRFB deployment is creating a new source of vanadium demand outside traditional steelmaking.

China's VRFB sector is expected to consume around 40,000t of V2O5 equivalent in 2026 based on the current pipeline of planned and ongoing projects.

This demand could become increasingly important for vanadium producers. Steel remains the dominant end-use market, but energy storage offers a new structural growth channel.

Electrolyte demand is particularly relevant because VRFB systems use large quantities of dissolved vanadium. Larger storage durations require more electrolyte, meaning vanadium consumption rises with total energy capacity.

The technology's aqueous electrolyte also gives VRFBs an inherent safety advantage for stationary storage. This can be important for utilities, industrial sites and grid operators managing fire risk.

As stack costs decline, electrolyte pricing will become an even larger factor in total system economics. That could strengthen the connection between vanadium prices and the competitiveness of VRFB projects.

The Metalnomist Commentary

China's VRFB expansion is turning vanadium into an energy storage material as well as a steel alloy. If stack costs keep falling, electrolyte demand could become one of the most important new sources of structural vanadium consumption.

BYD EV Sales Recover in May as Export Demand Offsets China Weakness

BYD

BYD EV sales returned to year-on-year growth in May as surging overseas demand offset continued weakness in China. The company sold 383,453 new energy vehicles during the month, up 0.3% from a year earlier.

BYD EV sales had declined for consecutive months since October 2025 as domestic policy changes, weaker incentives and government pressure against aggressive price competition weighed on China’s automotive market.

BYD EV sales are now increasingly dependent on international markets. Exports jumped to 160,644 units in May from 89,047 a year earlier, showing how rapidly the company is building a global sales base.

The recovery also highlights a broader shift in China’s EV industry. Domestic competition remains intense, while manufacturers are increasingly using overseas markets to absorb expanding production capacity.

Exports Become BYD’s Main Growth Engine

BYD sold 376,990 passenger NEVs in May and another 6,463 commercial vehicles. Battery electric vehicle sales fell by 2.8% year on year to 198,674 units, while plug-in hybrid sales rose by 3.3% to 178,316 units.

The split shows that plug-in hybrids continue to play an important role in BYD’s product mix. PHEVs can appeal to buyers that want electrification without relying entirely on charging infrastructure.

China classifies battery electric vehicles, plug-in hybrids and fuel-cell vehicles as new energy vehicles. For battery material demand, however, the distinction matters because BEVs generally require larger battery packs than PHEVs.

BYD’s January-May NEV sales fell by 20% year on year to 1.4mn units. The decline followed government and industry efforts to reduce destructive price competition in China’s vehicle market.

The rollback of vehicle purchase tax incentives from 1 January also weakened domestic demand. At the same time, major automakers have committed to paying suppliers within 60 days to improve financial stability across the supply chain.

Exports are increasingly compensating for that pressure. Brazil has become one of BYD’s most important international markets and is now the largest destination for Chinese NEV exports.

Easing import restrictions in markets including Canada could provide additional export opportunities. This strengthens the case for Chinese automakers to continue expanding assembly, logistics and distribution networks overseas.

EV Export Growth Supports Battery Materials Demand

Higher oil prices have also improved the relative economics of electric vehicles. Rising crude prices since the escalation of Middle East tensions have increased operating costs for combustion-engine vehicles and strengthened EV competitiveness.

This can support demand for lithium, graphite, copper and other battery materials if EV exports continue to rise. However, the material impact will depend on the mix between BEVs and smaller-battery plug-in hybrids.

BYD’s shift also matters for the wider automotive metals market. Growing EV output supports copper demand through motors, wiring and power electronics, while alu

minium remains important for lightweight structures and battery enclosures.

The company has been fully committed to electrified vehicles since ending production of gasoline-only cars in March 2022. BYD sold 4.626mn NEVs in 2025, up 8.3% from the previous year.

The challenge now is geographic balance. Domestic growth is slowing, while overseas markets are becoming more important to utilisation rates and future production growth.

That shift could accelerate localisation outside China. As export volumes rise, BYD and other Chinese automakers may increasingly invest in overseas assembly and regional supply chains to manage tariffs, logistics and local-content rules.

The Metalnomist Commentary

BYD’s May recovery shows that China’s EV growth story is becoming increasingly export-driven. For battery metals, the key variable is no longer only Chinese vehicle sales, but how quickly Chinese manufacturers can convert overseas demand into sustained BEV and PHEV production growth.

BTR Anode Capacity Expansion Strengthens China’s Battery Materials Base

BTR

BTR anode capacity is expanding again as the Chinese battery materials producer starts construction of a new 120,000 t/yr anode material project in Changzhou, Jiangsu province. The project will deepen the city’s role as BTR’s largest anode production hub in China.

BTR anode capacity in Changzhou already includes an 80,000 t/yr facility completed in June 2023. The new project will significantly increase the company’s local production base, although a commissioning timeline has not yet been disclosed.

BTR anode capacity reached 782,500 t/yr in 2025, including 622,500 t/yr in China and 160,000 t/yr in Indonesia. The latest investment shows that the company is continuing to add scale both domestically and overseas.

The expansion comes as Chinese anode material shipments continue to grow, supported by higher new energy vehicle production and rapid battery energy storage deployment.

Changzhou Location Strengthens Links to Battery Customers

BTR selected Changzhou because Jiangsu province hosts several major battery manufacturers, including CATL, CALB and Svolt. Proximity to these customers can lower logistics costs and strengthen supply-chain coordination.

This matters because anode materials are a core component of lithium-ion batteries. Battery manufacturers require consistent chemistry, particle characteristics, coating performance and large-volume supply.

Locating capacity near major cell producers can also shorten qualification and delivery cycles. As battery makers scale output, suppliers that can provide reliable local volumes gain an operational advantage.

China’s anode material market remains large and fast-growing. Domestic research groups estimated shipments of 2.9mn-3.12mn t in 2025 and expect volumes to rise to 3.3mn-3.7mn t in 2026.

That growth reflects demand from both EVs and stationary energy storage. The latter is becoming increasingly important as China and other markets deploy larger battery storage systems for renewable power integration.

Overseas Expansion Broadens BTR’s Supply Footprint

BTR is also expanding outside China. Its Indonesian cathode plant is operational and ramping toward its designed 160,000 t/yr capacity.

The company’s Morocco project remains under construction, with planned cathode capacity of 60,000 t/yr. These investments show that BTR is building a broader international battery materials network alongside its large Chinese production base.

Overseas expansion gives the company access to regional customers and can help manage trade, localization and supply-chain requirements. This is becoming more important as battery markets fragment across Asia, Europe and North America.

At the same time, continued capacity growth raises competition. Chinese anode producers will need to balance scale with utilisation, pricing and product differentiation as more capacity enters the market.

BTR’s Changzhou project therefore reflects both confidence and pressure. Demand is still growing, but success will depend increasingly on customer integration, cost control and international market access.

The Metalnomist Commentary

BTR’s expansion shows that battery materials competition is shifting from simple capacity growth toward location, customer proximity and global footprint. The strongest producers will be those that combine scale in China with regional production in key overseas markets.

China Renewable Energy Plan Supports Metals Demand but Leaves Growth Uncertain

China, Renewable Energy Plan

China renewable energy plan for 2026-30 points to continued structural demand growth for copper, aluminium, lithium, vanadium and rare earths. However, the metals impact will depend on how far wind, solar, storage and grid investment move beyond targets that China is already close to reaching.

China renewable energy plan targets wind and solar at more than 50% of total installed power capacity by 2030 and positions them as the main source of power generation. The wording is important because wind and solar already account for around 48% of China’s installed power capacity.

China renewable energy plan therefore provides policy support but not necessarily a new demand shock. The key issue for metals producers is whether Beijing pushes deployment materially above the 50% threshold and introduces additional incentives for solar, storage and grid infrastructure.

China’s total installed power capacity reached 4,010GW by the end of May. Solar accounted for 1,260GW and wind for 660GW, with both sectors still growing at double-digit rates.

Copper and Aluminium Depend on How Far Renewables Expand

Renewable infrastructure remains a major source of metals consumption. Solar projects require aluminium for frames, mounting systems and electrical applications, while wind turbines consume aluminium, copper, speciality steels and rare earth permanent magnets.

Industry estimates put aluminium consumption at around 13,500t for every 1GW of solar capacity and up to 3,000t for 1GW of wind capacity. Further expansion could therefore create substantial incremental demand.

However, China is already close to the plan’s minimum capacity target. Wind and solar together represent about 48% of total installed capacity, leaving only a modest increase required to exceed 50%.

This has made market participants cautious. If deployment slows after the target is reached, incremental aluminium demand could be weaker than previous renewable investment cycles.

The outcome changes if actual capacity moves toward 55% or higher. Chinese policy targets are often designed with room for overachievement, meaning the final installed share could materially exceed the stated minimum.

Copper has a stronger structural demand case because renewable generation also requires transmission, substations, grid reinforcement and electrical equipment.

Copper demand from China’s wind and solar sectors is expected to reach around 1.85mn t this year, almost three times the 620,000t consumed in 2020. That growth demonstrates how renewable buildout is already reshaping Chinese copper consumption.

Storage and Charging Add Another Critical Metals Demand Layer

The plan extends beyond renewable generation. China is targeting 300GW of new energy storage capacity and 40mn electric vehicle charging units by 2030.

Storage deployment strengthens demand for lithium and other battery materials. Rapid renewable penetration increases the need to balance variable generation, making grid-scale batteries increasingly important to the power system.

Lithium consumption from energy storage could rise substantially over the next decade. However, strong demand growth does not automatically mean higher lithium prices because new mine and processing capacity may expand just as quickly.

Vanadium could also benefit if long-duration flow batteries capture part of China’s storage market. Rare earth demand may gain additional support from wind turbine generators and high-performance electric motors.

Charging infrastructure adds another copper and aluminium demand channel. Millions of additional charging points require cables, connectors, distribution equipment and grid upgrades.

The plan therefore supports a wider metals ecosystem than wind and solar installations alone. Generation, storage, charging and grid reinforcement all add material intensity to China’s energy transition.

The biggest uncertainty is execution. China has already built renewables at enormous scale, so future metals demand will depend on whether policy accelerates deployment beyond current momentum rather than merely formalising existing trends.

The Metalnomist Commentary

China’s new energy plan is supportive for metals, but the 50% wind-and-solar target alone is not the real story because the country is already close to it. The stronger demand signal will come from how aggressively Beijing expands storage, grids and renewable capacity beyond the minimum target.

Brazil Critical Minerals Industry Needs Government Support to Move Downstream

Brazil, Critical Minerals

Brazil critical minerals industry development will depend on stronger government support, infrastructure and long-term capital if the country wants to move beyond raw material extraction. Industry executives at the Energy Summit in Rio de Janeiro argued that mineral wealth alone will not create competitive processing and manufacturing supply chains.

Brazil critical minerals industry has substantial geological potential, but projects face gaps in logistics, technology, processing capacity and financing. Predictable legal and regulatory frameworks will therefore be essential to attract investment with mine-development timelines measured in decades.

Brazil has recently strengthened its national critical minerals framework, with policy focused on domestic processing, transformation and higher-value production rather than exports of raw materials alone.

The industrial opportunity extends beyond individual minerals. Companies can improve project economics by recovering multiple metals and valuable by-products from existing mining and processing streams.

Renewable Power Could Give Brazil a Processing Advantage

Brazil does not need to replicate China’s critical minerals model to become competitive. Its advantage could come from combining mineral resources with abundant renewable electricity and water resources to build a lower-carbon processing base.

This matters because refining and mineral processing are often energy-intensive. Access to competitive renewable power can reduce operating costs and lower the embedded carbon of finished materials.

That advantage could become increasingly valuable as automotive, battery, aerospace and industrial customers demand more traceable and lower-carbon feedstock.

Brazil also needs to capture more value between the mine and final customer. Beneficiation, refining, recycling and advanced materials production create significantly more industrial value than exporting ore or concentrate alone.

Government support can help close the financing gap during this transition. Critical mineral projects typically require large upfront capital commitments and long development periods before generating cash.

The challenge is therefore not simply identifying deposits. Brazil needs infrastructure, technology transfer, skilled labour and stable rules that encourage companies to build processing capacity domestically.

Copper Investment Shows Scale of Industrial Opportunity

Copper illustrates both Brazil’s opportunity and the broader global supply challenge. Electrification, grids, renewable energy, energy storage and artificial intelligence infrastructure are increasing the strategic importance of the metal.

Major new discoveries remain difficult, while existing mines are often facing declining grades and higher development costs. This strengthens the value of large established mineral districts that can support expansions and new processing capacity.

Vale Base Metals is positioning Carajas as one of its main copper growth platforms. The company has outlined multi-billion-dollar copper investment in the region, including $3.5bn of planned spending between 2026 and 2030 alone.

Vale is also pursuing more automated mining technologies and hybrid extraction systems, including electric equipment. These investments could reduce operating emissions while improving productivity.

Copper recovery remains challenging because ore contains relatively small amounts of payable metal compared with total material moved. That makes efficiency, energy costs and by-product recovery increasingly important to project economics.

Brazil’s wider critical minerals strategy will face the same test. Resource scale provides the opportunity, but competitiveness will depend on whether the country can convert geology into processed materials and reliable industrial supply.

The Metalnomist Commentary

Brazil has the resources and renewable power to become more than a mineral exporter, but geology alone will not build a critical materials industry. The decisive step is using policy and capital to pull processing, technology and downstream manufacturing into the country.

Nornickel Nickel Surplus Forecast Shrinks as Indonesia Supply Tightens

Nornickel

Nornickel nickel surplus forecast has been cut sharply for 2026 as Indonesian ore constraints, higher feedstock costs and sulphur shortages slow the supply growth that drove recent oversupply. The Russian producer now expects a marginal global surplus of around 20,000t, down from its previous forecast of 240,000t.

Nornickel nickel surplus forecast reflects a major shift in supply conditions. Global nickel production is expected to fall by 5% to 3.71mn t in 2026, marking the first annual decline in a decade, while demand is forecast to rise by 2% to 3.69mn t.

Nornickel nickel surplus forecast also places Indonesia at the centre of the market balance. Lower effective mining volumes, declining ore grades and sharply higher ore prices are tightening feedstock availability for NPI, HPAL and Class 1 nickel producers.

The adjustment follows a 2025 surplus of around 278,000t, when supply increased by 7% and demand rose by 6%. The market is therefore moving from structural oversupply toward a much tighter balance.

Indonesia Ore and Sulphur Constraints Reshape Supply

Indonesia mined around 320mn t of nickel ore in 2025 against an approved quota of 379mn t. For 2026, quotas are expected at around 300mn t, but actual mining could be closer to 270mn t if utilisation remains near 90%.

Lower ore grades further reduce contained nickel availability. Indonesian NPI production fell by 8% year on year in January-May, suggesting smelters are already feeling the impact.

Philippine ore imports could reach around 25mn t this year and offset part of the shortfall. However, Indonesia’s July quota review remains a critical market variable.

Ore economics are tightening as well. Indonesia’s revised pricing formula has doubled or tripled minimum ore prices for some grades.

Nornickel estimates the new system could add as much as $5,000/t to the cost of Class 1 nickel produced from Indonesian feedstock on a cathode-equivalent basis.

HPAL producers face another problem: sulphur.

Middle East disruption has pushed sulphur prices from around $300/t to above $1,000/t. HPAL operations require roughly 10-11t of sulphur for every tonne of nickel produced.

Indonesia sourced more than 75% of its sulphur imports from the Middle East in 2025, leaving battery nickel projects highly exposed to disrupted maritime supply.

Around one-third of HPAL capacity is currently idle, while HPAL production fell by 20% year on year in May.

Nornickel expects Indonesian NPI output to decline by 11% this year and mixed hydroxide precipitate production by 9%. Class 1 nickel supply is forecast to fall by 2%.

Demand Growth Stays Modest as Stainless Scrap Use Rises

Nickel demand is still growing, but not strongly enough to create a clear deficit.

Nornickel expects stainless steel nickel consumption to rise by only 1% this year. Chinese producers are using more scrap, reducing their need for primary nickel units.

China’s average stainless scrap share is expected to increase to 24% in 2026 from 19% in 2025. That change could keep Chinese primary nickel demand in stainless steel broadly flat at around 1.6mn t.

A higher share of 316 stainless partly offsets the scrap effect because 316 contains more nickel than 304. Chinese 300-series stainless output increased by 3% in the first five months of the year, while 200-series production rose by 11%.

Battery-related demand remains stronger.

China’s nickel sulphate output is forecast to rise by 15% to 421,000t of contained nickel in 2026 and reach 455,000t in 2027. Indonesian nickel sulphate production is expected to increase by 18% to 59,000t this year.

Matte output is another growth area. Indonesian nickel matte production is forecast to jump by 48% as conversion from NPI becomes more attractive.

The market could loosen again in 2027. Nornickel expects the surplus to widen modestly to around 55,000t if Indonesian ore quotas increase, sulphur availability improves and new processing capacity ramps up.

The near-term nickel story has therefore changed. Oversupply has not disappeared, but the margin between surplus and balance has narrowed sharply as Indonesian policy and feedstock economics begin to constrain output.

The Metalnomist Commentary

Nickel’s biggest bullish driver is no longer demand acceleration but supply discipline in Indonesia. If ore quotas remain tight and sulphur costs stay elevated, the market could remain far more balanced than recent oversupply trends suggested.

Defu Copper Foil Facility Targets AI and New Energy Demand Growth

Defu Technology

Defu copper foil facility plans will add another major layer of Chinese capacity for high-end electronic circuit materials as artificial intelligence, communications and energy transition sectors lift demand for specialised copper products. Defu Technology will invest 3.1bn yuan to build the project in Jiujiang, Jiangxi province.

Defu copper foil facility development will be focused on high-end AI electronic circuit copper foil. The project will be built in two phases, each with 25,000 t/yr of production capacity.

Defu copper foil facility timing has not yet been disclosed. But the investment signals continued confidence in downstream copper demand linked to AI infrastructure, 5G and 6G communications, low-earth-orbit satellites and new energy applications.

The company already had 175,000 t/yr of copper foil capacity at the end of 2025. Its output rose by 50% to 139,600t last year, while sales increased by 52% to 140,900t.

AI Infrastructure Adds New Demand Layer for Copper Foil

Copper foil is becoming more strategically important as electronics, batteries and data infrastructure demand higher-performance materials. AI systems require dense electronic circuits, high-speed signal transmission and reliable thermal and electrical performance.

Defu’s new project targets that shift. High-end electronic circuit copper foil is used in printed circuit boards and advanced electronics, where quality, thickness control and surface performance can determine reliability.

AI-related demand is still emerging, but it is already becoming relevant to copper markets. Some market participants estimate global copper demand from AI-related applications could reach around 350,000t in 2026.

That demand does not come only from data-centre power cables. It also includes circuit materials, cooling systems, electrical equipment, grid connections, transformers and backup power infrastructure.

Defu is therefore positioning itself closer to higher-value copper demand. The company is not simply expanding commodity capacity; it is targeting sectors where copper foil quality and customer qualification matter.

New Energy and Electronics Support Capacity Expansion

Energy transition sectors remain a key driver for electrolytic copper foil demand. Copper foil is widely used in lithium-ion batteries, especially as current collector material for anodes.

China’s copper foil operating rates improved significantly in 2025. Average electrolytic copper foil operating rates rose to 77.1%, up by 18.8 percentage points from a year earlier.

That recovery reflects stronger downstream demand from battery, electronics and new energy markets. It also helps explain why producers such as Defu are still adding capacity despite competition across China’s materials sector.

The planned Jiujiang facility will lift Defu’s ability to serve multiple growth markets. These include AI hardware, communications equipment, satellites, batteries and other high-end electronics.

However, expansion also raises competitive pressure. As more Chinese copper foil capacity enters the market, producers will need to differentiate through product quality, customer qualification and exposure to higher-margin applications.

For copper demand, the project reinforces a broader structural point. Electrification is no longer limited to EVs and grids. AI, satellites, communications and advanced electronics are adding new copper-intensive demand channels.

The Metalnomist Commentary

Defu’s investment shows that copper demand is becoming more technology-driven and more specialised. The strongest copper foil producers will be those that can move beyond volume growth and qualify into AI, battery and high-end electronics supply chains.

Aluminium-Magnesium Alloy Foundry Output Rises as China’s Auto Lightweighting Demand Grows

Al-Mg alloy foundry

Aluminium-magnesium alloy foundry output in China rose strongly in 2025 as the automotive sector increased demand for lightweight structural materials. Output climbed by 8.8% from a year earlier to 9.05mn t, making it the fastest-growing major foundry product category.

Aluminium-magnesium alloy foundry output outpaced grey cast iron, ductile iron and steel castings, according to the China Foundry Association. The increase reflects the growing role of aluminium and magnesium in vehicle weight reduction, emissions reduction and new energy vehicle design.

Aluminium-magnesium alloy foundry output has also expanded steadily over a longer period. Compared with 6.8mn t in 2020, production rose by 33.1% over five years, equal to a compound annual growth rate of 5.9%.

The figures show that China’s foundry sector is shifting toward lighter, higher-value materials. Automotive demand remains the main driver, especially as electric vehicle and hybrid platforms require more weight-efficient structures.

Automotive Lightweighting Drives Alloy Casting Growth

China’s automotive sector consumed 15.8mn t of foundry products in 2025, up 5% from a year earlier. The sector accounted for 30.2% of total foundry demand, making it the largest and most important end-use market.

Lightweighting is becoming more important because automakers need to improve energy efficiency, extend driving range and reduce lifecycle emissions. Aluminium-magnesium castings support those goals by replacing heavier components in selected structural and mechanical applications.

New energy vehicles are a major demand source. Electric vehicles and plug-in hybrids need lighter body structures to offset battery weight, while also supporting higher efficiency and better performance.

This trend benefits aluminium-magnesium alloy producers, die casters and foundries with automotive qualification. It also supports demand for higher-quality feedstock, tighter process control and more consistent alloy chemistry.

China’s total foundry output across all materials reached 52.3mn t in 2025, up 3.1% from a year earlier. That was the second-highest level since 2001, after 54.05mn t in 2021.

The overall foundry market is therefore growing, but the strongest momentum is in lightweight alloys. This shows how vehicle electrification and emissions policy are reshaping metal demand inside China’s manufacturing base.

Magnesium Feedstock Demand Strengthens With Foundry Expansion

Magnesium alloy feedstock consumption rose by 32% on the year to 215,000t in 2025. The increase was driven by stronger aluminium-magnesium alloy foundry output and broader use of lightweight casting materials.

This matters because magnesium is a smaller but strategically important metal. It is used in aluminium alloys, die casting and lightweight components, making it closely tied to automotive and transport applications.

Upstream magnesium metal output also increased. China produced 391,200t of magnesium metal in January-April, up 21.6% from a year earlier.

The rise in magnesium production suggests that upstream supply is responding to stronger downstream alloy demand. However, the sector remains exposed to energy costs, environmental controls and regional production concentration.

For aluminium and magnesium markets, China’s foundry data confirm a structural demand trend. Lightweight casting demand is no longer a niche story. It is becoming a core part of automotive materials strategy.

The next phase will depend on vehicle production growth, new energy vehicle penetration and the ability of foundries to meet stricter quality standards. As automakers push for lighter platforms, aluminium-magnesium alloys should remain one of the main beneficiaries.

The Metalnomist Commentary

China’s foundry data show that lightweighting is becoming a real metals demand driver, not just an automotive design concept. Aluminium-magnesium alloys are gaining because EVs and hybrids need lighter structures to offset battery weight and improve efficiency.

Mt Marion Lithium Expansion Advances as MinRes and Ganfeng Lift Spodumene Supply

Mineral Resources

Mt Marion lithium expansion is moving ahead after Mineral Resources and Jiangxi Ganfeng Lithium reached a final investment decision on a A$490mn upgrade at the Western Australian mine. The project will raise 6% spodumene concentrate output from 500,000 t/yr to 600,000 t/yr.

Mt Marion lithium expansion reflects renewed confidence in spodumene markets after a period of stronger pricing, Chinese demand and supply disruption from Zimbabwean export controls. The decision also reinforces Australia’s role as a core lithium feedstock supplier to global battery material chains.

Mt Marion lithium expansion includes A$220mn for underground mine development, A$240mn for a flotation plant and A$30mn for non-processing infrastructure. Construction is scheduled to begin in July-September.

The partners expect to commission the mine within 12 months of construction starting, with production ramp-up over the following six months. That timeline makes Mt Marion an important near-term growth project in the Australian hard-rock lithium sector.

Underground Mining Extends Mine Life and Feed Flexibility

The underground mine will supplement ore from the existing open pit and contribute up to 40% of processing feed. This will extend Mt Marion’s remaining mine life by six years beyond the previous estimate of 10 years.

That is strategically important because mine life extension improves supply visibility for customers and investors. Battery chemical producers need stable spodumene feedstock to support long-term lithium hydroxide and lithium carbonate production.

The underground development also gives MinRes and Ganfeng more operational flexibility. Combining open-pit and underground ore can support feed blending, grade control and continuity as the mine matures.

The project will cause minimal disruption to existing operations, according to the company. That matters because the mine is already a major producing asset and any downtime could affect near-term shipments.

Mt Marion is also backed by a strong downstream partner. Ganfeng is one of China’s leading lithium companies, giving the project a direct link to one of the world’s largest battery materials markets.

Flotation Plant Targets Higher-Grade Product Mix

The new flotation plant will remove SC3.5 product from MinRes’ mix and deliver a minimum SC5 grade product. This is a key upgrade because higher-grade concentrate can improve processing efficiency for downstream converters.

SC6 remains the benchmark product for hard-rock lithium supply. Increasing SC6 output to 600,000 t/yr gives Mt Marion stronger exposure to higher-value concentrate markets.

The investment economics are highly sensitive to price. At an assumed SC6 price of $2,700/t, MinRes expects the expansion payback period to be less than one year.

Spodumene prices have risen in recent months, supported by Zimbabwe’s lithium concentrate export controls and strong Chinese demand. The latest Australian SC6 assessment was $2,661/t on 19 May, down from $2,811/t a week earlier but still elevated enough to support renewed investment.

MinRes also cited higher lithium prices as a reason for restarting operations at its Bald Hill mine in Western Australia. Together, these moves suggest producers are again positioning for stronger lithium feedstock demand.

The broader lithium market remains volatile, but the Mt Marion decision shows that high-quality Australian assets can still attract capital when pricing, partners and mine-life extension align.

The Metalnomist Commentary

Mt Marion’s expansion shows that lithium investment is returning first to established, scalable assets with strong downstream links. The key lesson is that the next lithium cycle will reward producers that can improve grade, extend mine life and secure reliable routes into China’s battery supply chain.

Terrafame Scandium Recovery Study Could Create Europe’s First Domestic Supply

Terrafame

Terrafame scandium recovery plans could give Europe its only domestic scandium production source if a new project at the company’s Sotkamo operations in eastern Finland advances. The Finnish metals producer has launched a pre-feasibility study to assess scandium recovery from existing nickel and zinc production streams.

Terrafame scandium recovery would use the company’s current hydrometallurgical circuits, rather than requiring a standalone scandium mine. That gives the project a potentially lower-risk route because Terrafame already processes polymetallic ore and recovers multiple valuable metals.

Terrafame scandium recovery is strategically important because scandium supply remains extremely limited and heavily concentrated in China. Beijing controls around 85% of global supply and tightened export controls on the metal last year.

The study is expected to be completed by the end of 2026. If the project moves forward, Terrafame could target production in 2029.

Existing Circuits Could Lower Development Risk

Terrafame already produces battery-grade nickel, cobalt and copper. It also recovers uranium as a by-product from the same polymetallic ore system.

Adding scandium recovery to existing process streams could improve the value of Terrafame’s hydrometallurgical platform. It would also show how critical minerals can be extracted from established operations without developing entirely new mines.

This matters because scandium is usually produced in very small volumes as a by-product. Reliable recovery depends on chemistry, process control, impurity management and market qualification.

If successful, Terrafame could become a strategic supplier to European customers seeking non-China scandium. That would support supply-chain resilience for aerospace, aluminium alloys, solid oxide fuel cells and advanced materials.

The project also fits Europe’s wider critical raw materials agenda. The EU needs more domestic and allied sources of small-volume metals that support high-value industrial applications.

China Dominance Keeps Scandium Strategically Sensitive

Global scandium production remains limited at around 40-45 t/yr, while consumption reached about 60t in 2025. That small market size makes the supply chain highly sensitive to export controls and project delays.

China’s dominant position has increased interest in alternative sources. Export restrictions have made scandium more relevant to buyers that need secure material for advanced alloy and energy applications.

Several projects globally could increase supply over the next decade, including developments by NioCorp, Rio Tinto and Sunrise. Combined, these projects could lift global supply to 150-250 t/yr if they reach production.

That potential increase has raised some oversupply concerns. However, scandium demand may grow once buyers have more confidence in long-term availability.

This is a common problem for small critical materials markets. Customers hesitate to design around a material if supply is scarce, but producers struggle to invest before demand is proven.

Terrafame’s project could help break part of that cycle in Europe. A Finnish scandium source would not transform the market alone, but it could give manufacturers a more secure regional option.

The Metalnomist Commentary

Terrafame’s scandium study shows how Europe can extract more critical value from existing polymetallic operations. The opportunity is not only new mining, but smarter recovery of strategic by-products already moving through industrial circuits.

Hancock Lithium Mine Plan Advances as Spodumene Prices Recover

Hancock Lithium Mine

Hancock lithium mine plans in Western Australia are moving forward as stronger lithium concentrate prices revive confidence in large-scale spodumene development. Hancock Prospecting plans to build the A$1bn Andover mine, targeting production of up to 1.1mn t/yr of lithium concentrate.

Hancock lithium mine construction is scheduled to start in November 2028, with a two-year construction period. The project is planned for a 30-year operating life and would process 6mn t/yr of ore.

Hancock lithium mine development reflects a shift in lithium sentiment after the deep price collapse that forced project delays and suspensions across the sector. Spodumene prices have rebounded as Chinese battery demand improves and supply expectations tighten.

The Andover project is strategically important because Australia remains one of the world’s key hard-rock lithium supply bases. New capacity from Western Australia could support converters, battery producers and electric vehicle supply chains seeking long-term spodumene feedstock.

Andover Adds Scale to Western Australia’s Spodumene Pipeline

The Andover mine would become a major new lithium concentrate source if developed as planned. Annual output of up to 1.1mn t would give the project meaningful weight in the seaborne spodumene market.

The project sits within a broader ownership structure shaped by recent consolidation. Hancock Prospecting and Chilean lithium producer SQM partnered to acquire Azure Minerals in a A$1.7bn deal completed in May 2024 through their jointly owned company, SH Mining.

Andover is 60% owned by Azure, while Croydon Gold, a subsidiary of the Creasy Group, holds the remaining 40%. The involvement of Hancock and SQM gives the project both Australian mining strength and global lithium-market experience.

SQM’s role is especially relevant. The Chilean producer brings downstream lithium market knowledge, while Hancock adds financial capacity and Australian project execution capability.

The planned 30-year mine life also matters. Battery supply chains need long-duration feedstock sources, not only short-cycle spot supply. A project of this scale could support long-term offtake and conversion strategies.

Price Recovery Revives Lithium Project Economics

The Andover plan comes after a sharp recovery in spodumene concentrate prices. Prices rose in April as tighter supply expectations followed Zimbabwe’s introduction of export quotas for lithium concentrate.

Spodumene prices had previously collapsed to $900-1,100/t cif China in January 2024, down 83% after supply growth outpaced demand. That downturn forced many lithium developers to slow, delay or reassess projects.

Prices later began recovering in late 2025 as demand from China’s lithium-ion battery sector improved market sentiment. Stronger pricing has now made large hard-rock projects more attractive again.

However, lithium remains a volatile market. New supply from Australia, Africa, South America and China can quickly change balances if demand growth slows or inventories rebuild.

For Hancock, timing will be critical. Construction is not expected to start until late 2028, meaning the project will enter the market after the current price recovery has already been tested by several more years of battery demand and supply growth.

The strategic value remains clear. If lithium demand continues to rise from electric vehicles and energy storage, Andover could become an important feedstock source for global converters. If supply again expands too quickly, project economics may face renewed pressure.

The Metalnomist Commentary

Hancock’s Andover plan shows that lithium investment confidence is returning, but only for projects with scale, strong sponsors and long-term strategic value. The market has recovered from its deepest downturn, but future winners will still need cost discipline and secure downstream demand.

Global Recycled Metals Output Rises as China and Emerging Regions Expand Capacity

Recycled Metals

Global recycled metals output increased further in 2025 as China maintained its leading position and emerging regions expanded recycling capacity. Production of recycled copper, aluminium, lead and zinc reached about 59.2mn t, up 5.6% from a year earlier.

Global recycled metals output is becoming more important to non-ferrous supply security as mining, processing and trade flows face rising geopolitical and cost pressures. Recycling now provides a larger secondary source of industrial metal units for manufacturers, smelters and battery supply chains.

Global recycled metals output accounted for around 34% of total non-ferrous metal production in 2025. The sector also delivered cumulative savings of about 1.2bn t of primary mineral resources, underlining its growing role in resource conservation.

The growth shows that recycled metals are no longer a secondary environmental story. They are becoming a core part of industrial raw material strategy across copper, aluminium, lead, zinc and battery metals.

China Leads as Regional Recycling Capacity Expands

China remained the world’s largest recycled base metals producer in 2025, with output of 20.57mn t. That represented 34.7% of global production.

The country’s scale gives it a major role in recycled copper, aluminium, lead and zinc supply. It also strengthens China’s position across non-ferrous metals at a time when primary raw material security is under pressure.

Europe produced more than 10mn t of recycled base metals, while the US produced more than 6mn t. India and southeast Asia reached around 6mn t and 4mn t, respectively.

These figures show that recycling capacity is becoming more geographically distributed. Emerging regions are no longer only consumers of recycled raw materials. They are becoming processing centres in their own right.

Battery-related recycling is also growing quickly. Nickel, cobalt and lithium recovery is supporting the new energy industry as electric vehicle and energy storage supply chains look for more secure material sources.

China aims to increase domestic recycled material recovery to 23mn t by 2030 under its next five-year plan. That target implies annual growth of around 7%.

The country is also expected to strengthen recycled product certification and explore the inclusion of recycled materials in carbon trading systems. This could make recycled metal more valuable for customers seeking traceable and lower-carbon supply.

Trade Flows and Technology Move Toward Asia

Global recycled raw material trade is becoming more regional, more Asia-focused and more diversified. Europe and North America remain major exporters of recycled copper and aluminium feedstock.

Europe exports around 2mn t/yr of recycled copper and aluminium feedstock, while North America exports about 4.2mn t/yr. China and India remain the largest importers, with imports exceeding 4mn t and 2mn t, respectively.

Southeast Asia is becoming a key transshipment hub. Regional recycled aluminium feedstock trade reached about 1.3mn t of imports and 900,000t of exports.

Black mass from spent lithium-ion batteries is also increasingly moving toward Asian processing centres. This reflects Asia’s stronger battery materials processing base and growing demand for recovered nickel, cobalt and lithium units.

Technology is improving the recycling value chain. Advances in laser sorting, intelligent dismantling, multi-metal battery recovery and digital process control are raising recovery rates and product quality.

Leading producers have achieved recycling rates above 94% for aluminium and 95% for lithium. These levels show how recycling is moving closer to industrial-grade resource recovery rather than simple scrap handling.

New products are also expanding. High-strength recycled aluminium alloys, high-purity recycled copper and recycled rare-earth permanent magnets are gaining traction.

This matters because recycled metal must meet customer specifications before it can displace primary material. Better sorting, cleaner chemistry and stronger certification will determine how much recycled metal can enter high-value applications.

The Metalnomist Commentary

Recycling is becoming a strategic metals supply pillar, not just a sustainability tool. The next competitive edge will come from producers that can turn complex scrap and battery waste into certified, high-purity and customer-ready materials.

Danantara Weda Bay Nickel Stake Plan Signals Stronger Indonesian Control

Weda Bay Nickel

Danantara Weda Bay Nickel stake interest signals Indonesia’s push to increase domestic participation in strategic nickel assets. The sovereign investment agency is considering acquiring Eramet’s stake in Weda Bay Nickel after discussions with president Prabowo Subianto.

Danantara Weda Bay Nickel stake talks remain at an early stage, with no final decision made. But the move shows that Jakarta wants stronger local ownership in assets central to its electric vehicle battery supply chain strategy.

Danantara Weda Bay Nickel stake interest comes as Indonesia continues to use policy, quotas and state-backed entities to shape the nickel value chain. The country wants to capture more value from mining, processing and downstream battery materials.

Weda Bay Nickel is located in North Maluku and has operated under a special mining permit since 2019. It is one of Indonesia’s most important nickel ore assets.

Domestic Participation Becomes a Strategic Priority

Danantara could position itself as a strong local partner in Weda Bay Nickel. That role would support Indonesia’s broader effort to increase national participation in critical mineral assets.

Eramet currently holds around 37.8% of the project. China’s Tsingshan owns about 51.2%, while state-controlled Aneka Tambang holds roughly 10%.

This ownership structure already reflects Indonesia’s nickel strategy. Foreign capital and Chinese processing expertise have helped build the sector, but Jakarta is now seeking greater domestic influence over key assets.

A Danantara investment would not only change ownership. It could also strengthen state-linked oversight of production, ore allocation and downstream integration.

For Eramet, the talks come at a sensitive time. The company has already faced pressure after Weda Bay Nickel’s 2026 RKAB production quota was cut sharply.

RKAB Quota Cut Raises Nickel Supply Uncertainty

Eramet confirmed in February that Weda Bay Nickel’s 2026 RKAB quota was reduced by 70% to 12mn wet metric tonnes. That cut has made the asset’s production outlook more uncertain.

The quota reduction matters because Indonesia’s downstream nickel capacity depends on stable ore supply. Smelters, high-pressure acid leach plants and battery-material producers need consistent feedstock to maintain output.

Weda Bay Nickel is a key part of that supply chain. Any change in ownership, production quota or operating strategy can affect ore availability and regional nickel pricing.

Indonesia is trying to balance several goals at once. It wants more state participation, higher domestic value capture, stronger downstream processing and continued investor confidence.

Danantara’s potential entry could help align Weda Bay Nickel more closely with national policy. But it may also raise questions for foreign partners about operating certainty and long-term control.

The nickel market should watch whether the talks progress from early-stage discussions into a formal transaction. If Danantara moves ahead, it would mark another step in Indonesia’s shift from attracting foreign nickel investment to actively reshaping ownership of strategic assets.

The Metalnomist Commentary

Danantara’s interest in Weda Bay Nickel shows that Indonesia’s nickel strategy is entering a more state-directed phase. The key risk is whether greater domestic control can improve supply-chain resilience without unsettling the foreign capital and technical partners that built the sector.

Copper Record High Signals Deeper Supply Stress Across Global Market

Copper

Copper record high prices on the London Metal Exchange show how quickly supply risks, regional stockbuilding and stronger Chinese demand signals are reshaping the market. Three-month LME copper settled at $14,140/t, setting a new official high and reinforcing the metal’s structural bull case.

Copper record high momentum has not come from one isolated event. It reflects a convergence of mine disruption, weak Chilean output, tight concentrate availability, sulphuric acid constraints and US tariff-related stockbuilding.

Copper record high pricing is also being supported by stronger Chinese import signals. The Yangshan copper premium rose to around $72/t, while Shanghai Futures Exchange inventories have fallen by 58% since 13 March to 181,333t.

Comex copper also traded at record levels at $6.485/lb, with the US contract holding a premium of nearly $700/t over LME copper. That spread shows how US tariff risk continues to pull refined metal into the American market.

Supply Risks Now Dominate Copper Pricing

Supply pressure remains the strongest driver behind the rally. Chile’s three largest copper producers all reported lower March output, with Codelco down by around 10%, Escondida down by nearly 16% and Collahuasi down by almost 11%.

Chile’s national copper output fell by around 9% over the same period. That decline matters because the market has limited spare mine capacity to absorb losses from the world’s largest copper-producing country.

Lower ore grades remain a structural problem. Ageing infrastructure, operational interruptions and delayed modernisation projects are also reducing the ability of major mines to respond quickly to higher prices.

Copper concentrate treatment charges are deeply negative in China, confirming the pressure on concentrate availability. Smelters are competing for feedstock while mine supply remains constrained.

Sulphur and sulphuric acid have also become more important market variables. Middle East disruption and Chinese restrictions on sulphuric acid exports are raising risks for leaching and solvent extraction-electrowinning operations.

This is especially relevant to the African copperbelt, where sulphuric acid is a critical reagent. If acid availability tightens further, production costs could rise or output could be affected in one of the world’s key copper growth regions.

Peru adds another risk point. Open-pit copper mines there depend heavily on diesel for haulage and mine movement, making sustained fuel disruption a potential operational threat.

China Demand and US Stockbuilding Split Refined Flows

China is returning as a stronger buyer of imported cathode. Falling SHFE inventories and a higher Yangshan premium suggest that domestic availability has tightened enough to revive seaborne buying interest.

China’s stronger export data also support the demand picture. April exports rose by 14.1% year on year to a record $359.44bn, beating expectations and pointing to more resilient industrial activity.

That matters for copper because electric vehicles, grid equipment, renewable energy components and battery storage all require significant copper input. Stronger industrial exports can therefore reinforce physical demand.

At the same time, US policy risk is pulling refined copper west. Tariff-related stockbuilding has created a strong Comex premium, encouraging traders to move metal into the US system.

This split is tightening ex-US availability. The US is absorbing refined units for policy protection, while China is pulling cathode back into its import market.

Fund activity has amplified the move. Trend-following money has re-entered Comex as copper broke through technical levels, making prices more sensitive to momentum flows.

The current rally may still face corrections. However, the price floor remains supported by slow mine response, fragile processing inputs and competing regional demand centres.

Copper is no longer trading only as an industrial cycle indicator. It is becoming a strategic material shaped by policy, infrastructure demand, energy transition, AI-linked power systems and supply-chain security.

The Metalnomist Commentary

Copper’s record is not just a price event; it is a signal that the supply chain is losing flexibility. The strongest warning is that mine output, processing inputs and refined metal location are all tightening at the same time.