Copper possesses sustained upward momentum.

In March 2025, SHFE copper and LME copper broke through the 80,000 yuan/mt and $10,000/mt thresholds respectively, with market enthusiasm comparable to the same period in 2024. However, the driving logic behind these two surges was fundamentally different: the former was driven by inflated expectations, while the latter was driven by a deep adjustment in the supply and demand structure.

The unilateral rise in copper prices in 2024 was a typical case of overstretched expectations. The market pushed up prices based on three strong expectations: first, the expectation of tight ore supply due to weather disruptions in Chile and the shutdown of the Panama copper mine; second, the over-optimism about new energy demand driven by the doubling of PV installations and the high growth of new energy vehicle consumption data; and third, the expectation of US dollar depreciation amid expectations for US Fed interest rate cuts.

In reality, the release of new capacity in countries such as the DRC and Indonesia led to a slight YoY increase in global copper mine production, while the phase-out of PV policies slowed consumption growth, and the US dollar index fluctuated within a limited range. Ultimately, ICSG data showed a global copper surplus of 301,000 mt in 2024. The divergence between expectations and reality caused copper prices to pull back significantly in H2 2024.

In contrast, the rise in copper prices in 2025 exhibited more complex structural characteristics.

Supply side, the persistent inversion of TCs (long-term contracts fell to $20-30/mt) combined with production cuts by companies such as Tongling Nonferrous Metals intensified market expectations of smelting capacity contraction. Although copper cathode production still hit a record high in January-February, the slowdown in copper ore import growth and overseas disputes increased supply risks, tilting bargaining power toward mines.

Demand side, copper rod and copper pipe & tube production rebounded to historical highs in Q1, and this year's power grid investment is expected to exceed 700 billion yuan, with new energy and AI computing power demand providing long-term growth. Meanwhile, expectations of the US government imposing copper tariffs triggered cross-market arbitrage, with the price spread between COMEX copper and LME copper exceeding $1,300/mt, driving copper resources to the US and boosting short-term demand.

In addition, wire and cable factories locked in costs through buy hedging, while social inventory and exchange warrants peaked and pulled back, shifting the market structure from Contango to Backwardation, strengthening price support.

Before May, expectations of supply contraction, the peak demand season effect, and the logic of tariff arbitrage will continue to dominate the market, and copper prices may remain strong. However, caution is needed as the traditional consumption off-season may curb price gains. If US inflation rebounds and the room for interest rate cuts narrows, concerns about a US economic recession may arise. If the Panama copper mine resumes production and conflicts in the DRC ease, ore-side pressure may be alleviated.

In the long term, the imbalance between insufficient global copper mine capital expenditure, declining grades, and growing new energy demand will support the upward shift in the copper price center. If supply contraction in H2 2025 falls short of expectations, copper prices may face the risk of premium retracement.

We believe that the rise in copper prices in 2024 was an "ivory tower" of overstretched expectations, while 2025 is a real game of supply and demand restructuring. The current market is in a period of intertwined supply contraction and demand growth, and key variables around May will determine the height and sustainability of this round of market trends. Investors need to closely monitor policy developments, ore-side disruptions, and inventory changes, seeking a balance between optimistic expectations and potential risks.

(Source: Futures Daily)

To learn more about the dynamics of the copper industry chain, you are welcome to attend the CCIE 2025 SMM (20th) Copper Industry Conference and Copper Industry Expo, hosted by SMM, which will be held in Nanchang, Jiangxi from April 22-25, 2025. CCIE 2025 SMM (20th) Copper Industry Conference and Copper Industry Expo ~

Over 3,000 industry elites, representatives of upstream and downstream enterprises in the copper industry chain, government leaders, industry associations, third-party equipment, logistics and warehousing, and university research experts will gather together. The conference covers the entire industry chain, including mines, smelting, copper processing, trade, recycling, and end-use applications.

At the conference, more than 100 exhibitors will showcase the latest copper processing and smelting equipment, high-quality raw material suppliers, and new-type copper-based materials, highlighting the innovation and vitality of the copper industry.

The conference activities are rich and varied: the main forum focuses on global copper market trends, raw material supply, policy impact analysis, and market direction interpretation. Sub-forums delve into industry hot topics such as electrical power transmission and distribution, secondary copper, copper-based new materials, hardware and plumbing, and ESS. During the conference, there will also be a two-day field trip to 12 representative enterprises in the copper industry with a cumulative production of 1 million mt. Sharing cutting-edge technologies and valuable experiences will help upgrade the copper industry chain and promote high-quality industry development.

CCIE 2025 SMM (20th) Copper Industry Conference and Copper Industry Expo will help you grasp the industry pulse, expand your network, and seek business opportunities! SMM cordially invites you to gather in Nanchang, Jiangxi from April 22-25, to unite in the new era and jointly plan for new development!