TC/RC Swap Contract

Unprecedented. Unsustainable. Volatile.

Those are just some of the words thrown around over the past 6 months in the copper concentrate market.

Instead of trading in the familiar $50-100 range, TC/RCs have gone negative, with smelters effectively 𝘱𝘢𝘺𝘪𝘯𝘨 miners or traders for concentrates. And it’s not just copper: zinc TCs have collapsed from $165/DMT in 2024 to just $80/DMT in 2025.

𝗦𝗼, 𝗵𝗼𝘄 𝗰𝗮𝗻 𝗽𝗿𝗼𝗱𝘂𝗰𝗲𝗿𝘀 𝗮𝗻𝗱 𝗰𝗼𝗻𝘀𝘂𝗺𝗲𝗿𝘀 𝗺𝗮𝗻𝗮𝗴𝗲 𝘁𝗵𝗶𝘀 𝘃𝗼𝗹𝗮𝘁𝗶𝗹𝗶𝘁𝘆 - 𝗲𝗻𝘁𝗲𝗿 𝘁𝗵𝗲 𝘀𝘄𝗮𝗽 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁.

In aluminum, producers and consumers routinely enter into physical deals using a floating premium, then hedge that premium using a 𝘀𝘄𝗮𝗽 𝗮𝗹𝗶𝗴𝗻𝗲𝗱 𝘄𝗶𝘁𝗵 𝘁𝗵𝗲 𝗱𝗲𝗹𝗶𝘃𝗲𝗿𝘆 𝗺𝗼𝗻𝘁𝗵. It's not exactly the same as concentrates, but it’s a close cousin.

Why not apply the same principle to TCs?

If the market existed, a 𝘀𝗺𝗲𝗹𝘁𝗲𝗿 could have locked in 2025 and 2026 TC/RC levels back in early 2024 at positive rates, protecting themselves from the current collapse.

A 𝗺𝗶𝗻𝗲𝗿 could sell negative TCs into the future now to protect against levels rebounding.

A 𝘁𝗿𝗮𝗱𝗲𝗿 could play both sides of the contract depending on their overall position in the market, just as they do on aluminum.

There are hurdles - regulatory, liquidity, and standardization, to name a few - but the concept is sound. And if the CME Group already offers this on aluminum, why not copper or zinc concentrates?

Would your business benefit from the ability to hedge TCs using swap contracts? Let me know your thoughts.