Global copper concentrate squeeze forces Indian refiners to accept near-zero or negative processing charges, risking profitability in FY26.
Indian copper refiners, including Hindalco Industries and Adani Group’s Kutch Copper, are staring at a steep erosion in margins as treatment and refining charges (TC/RCs) turn zero or even negative, amid a global copper concentrate shortage that has intensified through 2025.
TC/RCs, traditionally a key revenue stream for smelters, have flipped direction—with some global suppliers reportedly proposing negative rates, forcing smelters to pay miners for processing copper, rather than being compensated. Chinese refiners have already accepted zero TC/RC terms, and Indian smelters, heavily dependent on imports, are now under direct threat of operating below cost.
“A prolonged period of negative TC/RCs could materially compress smelter profitability,” said Sumit Jhunjhunwala, VP at ICRA Ltd.
TC/RC margins at zero or negative globally
Indian smelters dependent on imports from Chile, Peru, Zambia
EBITDA impact on Hindalco’s copper business: 25–30% expected
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Hindalco, Adani Exposed to Spot Price Volatility
With India’s 0.5 million tonne smelting capacity equally split between Hindalco and Adani’s Kutch Copper, both players are exposed to volatile benchmark pricing for 2025, especially as older, higher-margin contracts phase out. Hindalco’s copper EBITDA has so far been supported by stronger realisations on copper rods and robust domestic demand, but that cushion may wear thin over the next 2–3 quarters.
“These few quarters will likely see margin pressure, even though management expects medium-term improvement,” noted Tushar Chaudhari, Research Analyst at PL Capital.
Hindalco’s resilience aided by copper rod pricing
Kutch Copper’s startup phase adds sensitivity to margin swings
Domestic demand strong: >0.7 MT refined copper consumed in 2023–24
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Structural Risks Mount as Global Supply Falters
India’s refiners are uniquely vulnerable due to their dependence on imported concentrate, primarily from Chile, Peru, Indonesia, and Zambia, where recent supply disruptions and political instability have driven shipment delays and price spikes.
With copper prices largely range-bound, smelters are relying more heavily on by-product sales (like sulfuric acid and precious metals) to salvage margin. New benchmark contracts for 2025 are reportedly being signed at significantly lower TC/RC levels, putting even long-term players at risk.
“Without a recovery in refining fees, by-product revenue becomes critical,” said Yash Sawant of Choice Broking.
New 2025 contracts priced lower than previous years
Supply-side delays and volatility persist in global mining hubs
By-product dependence rising to protect margins
Government Interventions Underway, But Outlook Remains Clouded
In response, the Indian government is rolling out policy tools to insulate the refining industry, including capital incentives, promotion of foreign miner partnerships, and copper-specific trade provisions in international agreements. Still, the impact of these structural fixes will take time, and analysts expect continued EBITDA pressure, working capital strain, and import price risks through FY26.
“Until supply-side reforms take hold, refiners will remain exposed to global shocks,” added Sanket Singh of Grant Thornton Bharat.
Watchlist:
Hindalco (₹660–₹685 range) – Earnings risk if copper margins remain compressed
Adani Enterprises (via Kutch Copper) – Monitor updates on operational scale-up amid weak refining spreads
MCX Copper Futures – Track concentrate price trends and arbitrage
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