China’s main metals association is asking the government to limit new Copper, Zinc, and Lead smelting projects. This request comes amid rising domestic competition and low processing fees, creating overcapacity that threatens market stability. The China Nonferrous Metals Industry Association wants to restrict new Copper projects because treatment and refining charges are at record lows. If these measures are adopted, it would be the most significant market intervention in China since the aluminum production cap in 2017. The FXStreet Insights Team collects observations from market experts, sharing insights from various analysts. Their newsletter aims to provide expert insights, not just headlines. Subscribers receive daily updates and promotions by email. Relevant information includes the performance of USD/CNH, G10 currency rankings, Gold prices, and trade forecasts across different currencies and commodities. They also offer guidance for potential traders, like a list of the best Forex Brokers for 2025. FXStreet does not provide personalized recommendations or guarantee the accuracy of its information. Investing in open markets carries risks that should be evaluated carefully. Due to the metals association’s proposal, we may see a significant bullish catalyst for copper prices in the coming weeks. If Beijing officially decides to limit smelting capacity, it would directly reduce the future supply of refined metal. This news comes as spot treatment charges for copper concentrate have dropped below $10 a tonne in October 2025, indicating severe stress among smelters. The market conditions support this potential price increase. Our data shows that combined LME and SHFE copper inventories have declined by nearly 30% since mid-2025, reaching levels not seen since the post-pandemic recovery in 2022. The existing tightness in physical supply means any disruptions from China, the largest refiner globally, could greatly affect global prices. We should recall what happened in 2017 when Beijing capped aluminum production. That move triggered a strong rally, sending aluminum prices up more than 30% in the following months. Traders should use this historical event as a guide for how the market might react if copper curbs are officially announced. For those looking to invest in a potential price rise, buying call options on copper futures for the first and second quarters of 2026 seems like a smart move. This strategy allows traders to benefit from potential gains while keeping their risk defined, giving time for policy details to emerge and impact the market. This is a way to engage with the developing supply-side story. To manage premium costs, traders could use bull call spreads. This strategy would limit potential gains but significantly reduce the cost of entry, making it ideal for expressing a moderately bullish outlook while waiting for confirmation from Chinese policymakers. It’s important to keep an eye on any official announcements from Beijing’s National Development and Reform Commission (NDRC). While copper is the primary focus, we shouldn’t overlook zinc and lead. These markets are also facing overcapacity, and similar supply-side measures could lead to comparable price increases. Monitoring the term structure and options volatility in all three base metals will be crucial in the upcoming weeks.

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