Could this be the crack in the current boom in metal prices, or could it spur prices to higher levels?
Major Chinese copper smelters are reported to be talking about cutting output in coming months because of the sharp run up in prices so far this year that saw them finish back over $US8,000 a tonne on Friday.
Trade reports picked up from China at the weekend claim the Jiangxi Copper Co and Tongling Nonferrous Metal Co are among groups that may cut output to reduce production costs, much in the way that stainless steel producers continue to cut output because of high nickel prices.
The reports say the smelters can't cover the cost of buying and processing imported raw material with copper at current prices.
There's talk of co-ordinated output cuts of between 10 and 15 per cent by a group of nine leading smelters, and larger cuts are possible if the first round does not work.
The moves echo the stance by stainless steel producers in China, elsewhere in Asia, in Europe and the US who not only continue to cut output, but have cut the amount of nickel used in their stainless steel products.
That was a reaction to the very strong run up in nickel prices earlier this year that saw them peak ataround $US55,000 a tonne. Nickel prices had fallen to around$US33,800 a tonne on Friday on the London Metal Exchange.
But unlike stainless steel producers who had the option of cutting their usage of nickel, or ending it completely, copper smelters and products users have no option but to keep using the metal, even in alloys.
Any reduction in Chinese refined copper output may force processors to buy refined metal or finished products on world markets, which would boost prices.
But would it? Chinese processors cut their imports last year and the price of copper sank sharply.
But when they were forced to start rebuilding stocks this year, Chinese demand drove copper prices higher.
The sharp rise in Chinese copper imports in the first half of this year has helped boost international copper prices by 27 per cent so far in 2007.
The rebound in demand came after Chinese buying eased sharply in the second half of last year as smelters cut their imports of concentrates and used up cheaper stocks to meet the impact of the surge in metal prices to recover levels last May.
But the smelters are facing additional problems, and it is not just confined to China.
Non-Chinese mining companies (Oxiana, Rio and BHP Billiton) have all cut contract fees paid to smelters for processing copper concentrate.
The cuts in some cases are being introduced in stages as various contracts rollover. But in many cases the reductions are 50 per cent or more a pound of copper contained in the concentrates sent for smelting.
On top of these cuts, mining groups have scrapped so-called price participation clauses which allowed smelters to share in rising copper prices.
The fees for this year were cut by an average 35 per cent, according to reports from Beijing.
The smelters using imported concentrates (and not locally produced material) will start making money once local selling prices rise to around $US8,900 a tonne.
Prices in the Shanghai copper futures market have lagged prices elsewhere in the world this year, rising 16 per cent up to last Friday. That puts them well under the LME cash settlement price on Friday of $US8,055 a tonne.
China's imports of refined copper and alloys more than doubled in the first half of this year to 998,077 tons, compared with a year earlier, according to customs figures released last week. Copper concentrate imports gained 27 per cent to 2.3 million tons.
The Chinese government is reported to have stopped local smelters from exporting finished products and refined copper offshore and recently doubled the export tax on refined metal and alloy to 10 per cent, a substantial incentive to remain in the domestic market.
But some analysts doubt there will be production cuts and claim this is just market talk to try and force a cut in the export tax, or force a deal with local producers of copper concentrates to lift prices.