Chinese copper smelters are producing at record levels, with refined output expected to hit nearly 1.2 million tons this month, according to Shanghai Metals Market. This represents a 4.6% increase from February and puts year-to-date growth at 10%, despite global ore shortages and collapsing processing fees. The surge comes as high copper prices have incentivized scrap metal use as a concentrate substitute.

Smelters are finding additional support from soaring sulfuric acid prices, which reached their highest levels since at least 2014 last month. The price spike stems from Russian sulfur export constraints and strong fertilizer demand, improving the economics of increased production. Meanwhile, global copper inventories have ballooned as buyers balk at lofty prices, particularly in China where Lunar New Year demand typically slows.

While official Chinese statistics for January and February output are due later this month, SMM's survey suggests refined production could drop in April and May when many smelters conduct annual maintenance. The current production boom threatens to undermine copper's recent price rally, with real-world buyers deterred by high costs and stockpiles building across the market.