Sharp Drop in Copper Prices Left Downstream Buyers Wary of High Levels, and Market Wait-and-See Sentiment Gradually Strengthened [SMM North China Spot Copper]

In light of the recent sharp decline in copper prices, SMM reports a noticeable deceleration in the global copper scrap trading trend. The rapid price correction has widened the bid-ask spread significantly, creating a sharp divergence in pricing expectations between market participants. Taking Bare Bright Copper as an example, overseas holders, seeking to hedge against the drop in absolute prices, have hiked their pricing coefficients to 99-99.5% of LME, a 1-percentage-point jump from 98-98.5% last week. Conversely, Chinese importers, constrained by domestic margin pressures, remain firm at the previous 98.5% coefficient. This "pricing mismatch" has hindered any consensus on coefficients, resulting in stagnant transaction activity across the board.

Morgan Stanley highlight that the race for AI and growing defense spending are becoming primary drivers for copper demand. Global AI data centers alone are projected to consume 740,000 tonnes of copper in 2026 (approx. 2.1% of total demand). The research warns that with mine development timelines extending to 18 years, the world could face a 10 million metric ton supply deficit by 2040, even if recycled copper scrap production more than doubles.