Copper, a globally essential industrial metal, possesses both commodity and financial attributes, earning it the nickname "Doctor Copper." Its price trends serve as a crucial barometer for the global economy.
Global copper ore resources are highly concentrated. The top five countries, including Chile and Peru, control 56% of global reserves. China holds only 4.1% of reserves but accounts for 43% of global refined copper production, creating a structure of "resources abroad, processing at home." Demand is transitioning from traditional sectors to new energy, with the power industry remaining the primary consumer. New energy vehicles, photovoltaics, and other fields are becoming new growth engines. On the supply side, growth is constrained by factors such as declining ore grades and long development cycles. TC/RC processing fees have fallen to historical lows, and the tight supply-demand balance is expected to persist long-term. Copper prices are driven by macroeconomic liquidity, supply-demand gaps, and inventory cycles. The long-term price center shows an upward trend, though risks such as geopolitics and technological substitution warrant caution.
**Basic Attributes and Contract Rules**
Copper (chemical symbol Cu) has an atomic weight of 63.54, a specific gravity of 8.92, and a melting point of 1083°C. Pure copper appears light rose or pale red but turns purplish-copper after forming an oxide film. It boasts excellent conductivity, thermal conductivity, and ductility, with conductivity second only to silver. As an irreplaceable industrial material, it is widely used in power, new energy, construction, and other sectors. Its core attributes are twofold: * Commodity Attribute: As an industrial raw material, its demand is highly correlated with global industrial activity. * Financial Attribute: Priced in USD, it is negatively correlated with the US Dollar Index and US Treasury yields. It serves as an important hedge against inflation and reflects global liquidity. The Shanghai Copper futures contract on the Shanghai Futures Exchange (SHFE) is the core benchmark for domestic copper pricing in China.
**Global and Chinese Copper Resource Landscape**
According to USGS data, global copper ore reserves in 2024 were approximately 980 million tonnes, with a highly concentrated distribution: Chile (190 million tonnes, 19.4%), Peru (100 million tonnes, 10.2%), Australia (100 million tonnes, 10.2%), Democratic Republic of Congo (80 million tonnes, 8.2%), and Russia (80 million tonnes, 8.2%). The top five countries collectively control 56% of global reserves. China's copper resource endowment is relatively poor. Its proven reserves in 2024 were 41 million tonnes, accounting for only 4.1% of the global total, characterized by "more lean ores, fewer rich ores." The quality of major global copper mines is declining; the global average mining grade is now 0.62%, down 62% from 2000. China's average mining grade is merely 0.45%. China's copper resources are mainly distributed in Tibet, Jiangxi, Inner Mongolia, and Yunnan, accounting for over 60% combined. In 2024, China imported over 30 million tonnes of copper concentrate, with an external dependence exceeding 80%. However, its refined copper production reached 13.43 million tonnes, constituting 47% of the global total. This forms the unique "resources abroad, processing at home" structure, dictating China's high reliance on imported raw materials.
**Supply and Demand Dynamics Analysis**
**Supply Side: Constraints Intensify, Growth Weakens** Mined Copper: Global copper mine supply has entered a "low-growth, high-disruption" bottleneck phase. The average annual increase from 2024-2026 is less than 500,000 tonnes, constrained by three main factors: 1. Continuously declining ore grades. 2. Long development cycles (10-20 years from exploration to production), coupled with insufficient capital expenditure in the global mining sector over the past decade, limiting new mine supply. 3. Increasing disruptions, such as frequent strikes and community protests in major producing countries like Chile and Peru. Water shortages and stricter environmental regulations further constrain capacity release. Recycled Copper: As a supplementary source, global recycled copper production in 2024 was about 4.71 million tonnes, representing 17.6% of total supply. Key exporters include the US (15% of global exports), Germany (9%), and Japan (6%), primarily exporting low-grade scrap. China is the leading processing and consumer nation, accounting for 35% of global recycled copper consumption. Southeast Asian countries like Malaysia and Thailand have become transit and processing hubs for scrap copper from Europe and America, leveraging bonded zone policies. The scrap trade pattern is diversifying, with China's import sources shifting from the US to Japan and Southeast Asia. Inventory: During the 2026 Spring Festival, global visible copper inventories (LME + SHFE + COMEX) exceeded 1 million tonnes. A phenomenon of "inventory migration westward" occurred in 2025, with LME stocks plunging 40% while COMEX stocks surged, exacerbating regional mismatches and spot tightness, providing strong support for copper prices and affecting SHFE copper spot premiums/discounts.
**Demand Side: Structural Transformation, New Sectors Lead Growth** Traditional Demand: The power industry remains the mainstay, supported by ongoing grid construction and smart grid upgrades in China. The average age of European power grids is 50 years, and North American grids exceed 40 years, nearing their design lifespan. Emerging Demand: The new energy sector has become the core growth driver. A single new energy vehicle uses 80-100 kg of copper, 4-5 times that of a traditional internal combustion engine vehicle. Global NEV sales are projected to surpass 24 million units in 2026 (+17%), contributing significantly to new copper demand. Photovoltaic installations require 3,000-5,000 tonnes of copper per GW. According to Wood Mackenzie, average copper consumption is 5,400 tonnes/GW for onshore wind and 15,300 tonnes/GW for offshore wind. Global new PV and wind capacity additions are forecast to reach 600 GW and 160 GW respectively in 2026. AI data centers use 27-33 tonnes of copper per megawatt, 2.5 times that of traditional data centers. Demand Trend: Global refined copper demand is expected to reach 28.7 million tonnes in 2026, with the new energy sector's share rising to 30%, projected to increase further to 35%-40% by 2030.
**Price Formation Mechanism and Volatility Patterns**
Copper prices exhibit clear bull-bear cycles, typically lasting 5-9 years. Bull markets can see gains of 200%-500%, while bear markets can see declines of 30%-70%. Key recent trends include a post-COVID rebound to $10,700/tonne driven by global stimulus and new energy demand (2020-2022). LME copper prices surged 41% in 2025, breaking to a historic high above $13,000/tonne by year-end. Since 2026, the SHFE front-month copper contract has fluctuated within a range of 100,000-115,000 yuan/tonne, showing clear correlation with international markets.
Core drivers include: * Macroeconomic Factors: The inverse correlation with the USD Index. Fed rate cuts in 2025 pushed the USD Index down to 95.55, helping SHFE copper break above 100,000 yuan/tonne. Global liquidity and economic growth directly impact demand expectations. * Supply-Demand Fundamentals: The supply-demand gap is the long-term core driver. Shortages in copper concentrate and robust new energy consumption underpin prices medium-to-long term. SHFE spot premiums/discounts and import arbitrage reflect domestic supply-demand tightness. * Financial and Speculative Factors: SHFE trading volume and open interest reflect market sentiment. Speculative fund flows exacerbate short-term volatility. Changes in COMEX non-commercial positions and SHFE major holder positions are key references for short-term price direction. Rising precious metal prices also lift the overall price center for copper.
**Future Trends and Risk Warnings**
**Future Development Trends (2026-2030)** Supply-Demand Balance: Supply-side annual growth is projected at only 1-1.5%, while demand-side growth is 2-3%, leading to a widening supply-demand gap. Demand Structure: New energy and the digital economy will be core drivers, elevating copper from an "industrial metal" to a "strategic scarce resource." Market Structure: Chinese companies are accelerating overseas copper mine acquisitions. Recycled copper technology is upgrading. The pricing influence of SHFE copper will further increase, becoming a significant global reference.
**Major Risk Factors** * Geopolitical Risks: Policy changes, strikes in major producing countries like Chile and Peru could disrupt raw material supply, causing short-term price volatility. * Technological Substitution Risks: Breakthroughs in aluminum-for-copper substitution, or efforts by PV/wind companies to reduce copper intensity, could dampen demand. * Macroeconomic and Market Risks: Global economic recession, unexpectedly hawkish Fed policy, or significant copper price increases leading to deferred or reduced downstream orders. * Environmental and Policy Risks: The EU's CBAM mechanism increasing export costs, or domestic environmental production restrictions affecting smelting capacity.
**Investment and Risk Management Suggestions** Investment Opportunities: Focus on the medium-to-long term upward price trend, high-quality upstream mining companies, technologically advanced midstream smelters, and downstream companies in high-demand sectors like new energy and AI data centers. Futures Operations: Downstream companies can use SHFE copper futures for buying hedges to lock in procurement costs. Upstream companies can use selling hedges to lock in sales prices, while managing position size and leverage appropriately. Risk Control: Establish diversified procurement and investment portfolios. Closely monitor SHFE warehouse receipts and open interest changes. Utilize futures and options tools to hedge against price volatility risks.
**Core Logic Summary** The core logic of the copper market can be summarized as: highly concentrated resources and逐年 declining grades leading to supply rigidity; the new energy revolution driving demand structure transformation; a tight supply-demand balance persisting long-term; and macroeconomic liquidity and financial factors amplifying price volatility. Short-term: SHFE copper prices, influenced by inventories, speculative funds, and spot premiums/discounts, are expected to maintain high volatility. Long-term: The expanding supply-demand gap will push the price center higher, continuously enhancing copper's strategic value. For traders and industry participants, close attention to SHFE contract rules and market data is essential. Grasping the core supply-demand矛盾, while considering the macroeconomic environment and short-term disruptions, and employing scientific risk management, is key to capturing the long-term structural opportunities in the copper market.
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