1. Extremely tight supply (the core reason, dominant)
a. Severe shortage of copper mines, TC processing fees dropping to the lowest negative value in history
The spot TC of copper concentrate has dropped to -128 US dollars per dry ton. Smelters processing copper ore not only have no processing fees but also have to subsidize the mines. The mine end firmly holds the pricing power; major copper mines in Chile, Indonesia, and the Democratic Republic of the Congo have reduced production and the grade of ore has been declining year by year. The exploration and production of new copper mines takes more than 10 years, and there will be almost no large new mines coming online in 2026-2027, and the increase in copper raw material supply is seriously insufficient.
b. Rapid decline in global copper inventory
The social inventory of the Shanghai Futures Exchange decreased significantly in a single week, LME copper inventory continued to fall, domestic circulating spot copper was scarce, the spot premium remained high, traders were generally reluctant to sell, and the import copper supply was insufficient.
c. Expectation of US tariffs diverts global copper resources
The market expects that the US will impose 232 tariffs on refined copper. A large amount of copper was transported from overseas to the US for storage, further reducing the available copper supply in the Asian region, and pushing up the domestic import copper premium.
2. Strong demand has significantly increased and no longer relies solely on real estate
a. Explosion of AI computing infrastructure
The copper consumption for AI servers and data centers is 3-5 times that of ordinary equipment. The large-scale construction of intelligent computing centers brings massive high-purity copper demand, which is the largest variable in this year’s new demand.
b. Continuous consumption in the new energy sector: steady increase in the installation of new energy vehicles, photovoltaic, and energy storage, the copper consumption per vehicle and per unit installation is much higher than that of traditional industries.
c. Large-scale upgrading of domestic power grids, increased procurement of cables and transformers during the summer peak load period, with stable demand. Even in July, which is the traditional off-season for processing, the demand can still support the price.
III. Favorable macro liquidity supports prices
Market expectations indicate that the Fed has initiated a rate-cutting cycle, causing the US dollar to weaken. The price of copper traded in US dollars has risen, driving up the domestic copper prices on the Shanghai Futures Exchange and the spot prices on the Yangtze River. The overall atmosphere for commodities is positive, with a large amount of capital flowing into the有色金属 sector.
IV. Summary
This round of price increase is not a short-term speculation： The supply bottleneck of copper mines in the upstream sector has persisted for a long time and cannot be alleviated in the short term； in addition， the new demands from AI， new energy， and power grids have increased， and the global copper supply-demand gap has continued to expand. Moreover， factors such as overseas hoarding of supplies， macro monetary easing， and multiple others have combined， making the copper price generally likely to rise rather than fall， and it is expected to maintain a high-level fluctuation and upward trend.