This year, "Dr. Copper" has continued its sharp ascent, at one point approaching record highs. On January 14, the three-month copper price on the London Metal Exchange (LME) held firmly above the $13,000 per tonne threshold, reaching an intraday high of $13,406. As of 18:00 Beijing time on the 14th, it was trading at $13,186 per tonne; SHFE copper was quoted at 104,120 yuan per tonne. Over the past month, copper prices have experienced significant volatility, with LME copper surging as much as 22% within the month and currently accumulating a gain of 6.14%. In fact, signs of this copper price rally were evident as early as mid-November of last year. Mine accidents in Indonesia and Chile, among other places, disrupted copper supply in the previous year, coupled with expectations for accelerating demand growth in the coming years, gradually propelled copper prices to "take off." Some analysts believe the rise in copper futures prices reflects market expectations of a copper shortage. Looking back at 2025, copper prices charted the steepest upward trajectory seen in nearly a decade. The current surge, continuing the momentum from last year, may hinge on a key variable: the threat of potential US tariffs on copper imports, which has prompted traders to significantly increase exports of copper to the United States in recent weeks, tightening supply in other global regions. Recently, Wall Street has developed a significant divergence in views regarding the future direction of this most crucial industrial metal. UBS warns of a severe structural shortage in the copper concentrate market for 2026/27. However, this structurally bullish outlook starkly contrasts with short-term cautions from Goldman Sachs and Citi. Goldman Sachs Commodities Research has raised its H1 copper price forecast from $11,525 to $12,750 per tonne but suggests it is difficult to sustain prices significantly above $13,000; Citi is more direct, stating that "January might represent the price peak for the entire year." Amidst this clash of bullish and bearish views, industry participants are highly focused on identifying other potential factors that could influence copper prices. Some market analysis also shifts the focus from short-term macro博弈 back to fundamental industry issues: against the backdrop of surging demand from the energy transition, does the global mining industry have the capacity to supply sufficient copper? If the current copper market performance is merely a false prosperity driven by US tariff fears, could the market face a sharp repricing following a brief price increase? Supply pressures have been a key driver behind "Dr. Copper's" ascent. Copper, often called "Dr. Copper" due to its wide range of applications and sensitivity to economic cycles, has seen its LME price rise 6.19% year-to-date, with the vast majority of gains occurring in the last month, drawing market attention. According to Wind data, from November 20, 2025, to the present, LME copper prices have climbed from $10,686 to $13,189 per tonne, a gain of nearly 24%. Hu Daoheng, a senior nonferrous metals industry researcher at Industrial Research, stated that the magnitude of this price surge is at an extreme historical level; looking back, such a gain within 30 trading days has only occurred three times. Xiao Chuankang, an analyst at Mysteel's Copper Division, also commented that the price increase has far exceeded market expectations, suggesting the presence of a significant sentiment premium or that the rally has prematurely priced in future gains. In the view of interviewed experts, the rare surge in copper prices reflects not only surging demand but also disturbances from multiple factors. "This round of copper price increases follows the broader uptrend in commodities and is primarily driven by macroeconomic factors," said Zhou Mi'er, Macro Research Director at Hundun Tiancheng Research Institute. Since the start of 2026, ample global macro liquidity and a strong equity market have jointly pushed copper prices higher; simultaneously, the warming precious metals market has further fueled the rise. Additionally, geopolitical factors have intensified market concerns about copper supply risks, and under this long-term narrative, copper prices have seen a significant spike. Hu Daoheng added that as Chile and Peru are major suppliers of copper ore, tensions in US-Venezuela relations have heightened concerns about the fragility of mineral resource supply from South America. Market views are divided on whether copper resources will face a shortage going forward. However, it is certain that supply-side pressures have been significant recently. South America has always been a primary source of global copper ore supply, but production in the region has been frequently disrupted in recent years. Although Chile remains the world's largest copper producer, its share of the global copper market has declined from 30% to 24% over the past decade. Currently, the main growth points for copper ore production are gradually shifting from South America to regions like Africa. For example, based on 2023 data, global mine copper production increased by approximately 3.6%, while Chile, a major South American producer, saw a growth rate of -1.5%. In contrast, the Democratic Republic of Congo in Africa recorded growth rates of 34.2%, 25.6%, and 20.4% for 2021-2023, respectively. However, Africa's low level of infrastructure implies that the construction and production periods for new supply may be prolonged, potentially facing developmental security issues and supply disruption risks at any time. The test for copper ore supply also stems from several mine seismic events last year: in late July, the world's largest underground copper mine, Chile's El Teniente, experienced mine shaft collapses due to an earthquake; then in September, a large-scale wet ore mass flow accident at the world's second-largest copper mine, Indonesia's Grasberg, blocked passages, prompting US mining giant Freeport-McMoRan to immediately suspend operations at the mine. Recently, a strike at Chile's Mantoverde copper mine has also been a trigger for the sharp price rise. Although this mine accounts for only about 0.5% of global copper ore production, a seemingly small proportion, against the backdrop of already low global visible inventories, any reduction in supply is magnified into a "crisis of available metal." Xiao Jing, Chief Nonferrous Metals Analyst at SDIC Futures, stated that the copper ore supply side faces dual pressures. On one hand, large mines disrupted in 2026, especially in Q1, will find it difficult to resume production significantly; on the other hand, low annual treatment charges have intensified the博弈 between mining companies and smelters, already prompting smelters in China and Japan to announce cuts in raw material capacity. She expects that, influenced by these factors, the growth rate of global refined copper smelting in 2026 is projected to face significant downward pressure. The lag in approval for new copper mine projects also affects supply. UBS points out that although major miners are increasingly optimistic about copper's long-term prospects and new project returns are quite robust, the number of Final Investment Decisions (FIDs) for projects in 2023-2025 remained low. Although approvals rebounded to about 800,000 tonnes in 2025, considering the 3-4 year construction cycle, this pace is still insufficient to meet demand growth. UBS expects the copper market to enter a deficit state in 2026/27, with inventory drawdowns supporting further sustained price increases. On one hand, unforeseen mine incidents make resumption difficult, coupled with slow project approvals failing to弥补 demand growth, leading to持续 tight copper supply; on the other hand, rapidly growing copper demand further amplifies the supply gap. Previously, copper was primarily used in power facilities, wires, cables, batteries, etc. Now, with trends like the new energy transition and the AI infrastructure boom, copper is enjoying an "era of红利." In new energy, data shows that each electric vehicle requires three to four times more copper than a traditional car. In AI, key components of data centers, along with the massive power consumption of large model training and inference, are forcing grid upgrades, all of which will push up copper consumption. Copper trade flows are becoming distorted. Current market judgments on the future direction of copper prices are highly polarized. Institutions like Goldman Sachs believe the recent rapid price increase is merely due to "structural tightness" under the threat of US tariffs; once the tariff path becomes clearer, prices will revert to the "true state" of global supply and demand. As evidence, spot copper prices are higher than the three-month forward contract, showing a typical "backwardation" market structure. Regarding this, Hu Daoheng stated that the LME cash premium is a classic signal of extreme short-term supply tightness and scarce spot liquidity, specifically that LME copper registered warrants or inventories have fallen to historically low levels, and buyers are willing to pay a high cash premium to obtain immediately available physical copper. According to a Xinhua report, in late July last year, the Trump administration signed a proclamation, imposing a unified 50% tariff on imported copper semi-finished products and high-copper-content derivatives starting August 1st, but excluding raw materials like refined copper. Experts analyzed that because the US severely lacks domestic smelting capacity, with a dependence on refined copper imports reaching 46%, comprehensive tariffs could lead to a surge of over 30% in domestic manufacturing costs, causing insufficient competitiveness of local products and potential industrial chain collapse, making short-term substitution and advancement difficult. The US exemption of primary products like refined copper is essentially to ensure the stability and security of basic raw material supply. Affected by this, since last July, traders have been rushing to ship refined copper to the US, causing COMEX copper inventories to surge and pushing the premium of US copper over LME copper. Zhang Yichi, a nonferrous metals researcher at Green Dahua Futures, also stated that due to US tariff expectations,现货 supply in non-US regions has tightened abruptly, with LME copper inventories in Europe being shifted to COMEX copper inventories, causing the LME cash premium to持续 rise. The current supply tightness is essentially a "false shortage," primarily because US tariff expectations are forcing inventories to be locked up and transferred, rather than indicating a global absolute scarcity. "If the US imposes tariffs on refined copper in the future, it will further exacerbate resource tightness in non-US regions." Zhou Mi'er added that the current surge in copper prices is essentially the market pricing in US tariff policy, and its sustainability highly depends on changes in the relevant price differentials. Therefore, vigilance is needed regarding potential outflows of copper from US inventories, which could ease tightness in non-US regions and subsequently impact copper prices. Subsequently, the US may impose import tariffs on refined copper, which will be a key factor for copper price changes. According to a CCTV news report, on July 30, 2025, local time, the White House stated that President Trump signed a proclamation. The US Department of Commerce recommended imposing a 15% tariff on refined copper starting in 2027, and 30% starting in 2028. Before June 30, 2026, the US Secretary of Commerce should provide the President with an update on the domestic copper market to inform his decision on whether to implement the import tax on refined copper. Goldman Sachs stated that as long as the tariff remains a "future threat" and is not immediately implemented, the US domestic copper price will maintain a premium compared to LME, driving continued stockpiling in the US. For non-US markets, this equates to supply tightening. If the tariff is implemented ahead of schedule in H1 2026, US stockpiling will cease, and LME prices could face a rapid correction. "If the US signals a potential tariff exemption in Q1 of this year, or if the long positions and net long positions of non-commercial COMEX copper and LME copper investment funds decrease significantly, it would indicate a retreat in speculative sentiment and capital, potentially pausing the copper price rally," Zhang Yichi said. "The second quarter of this year will be a turning point for copper market sentiment," Goldman Sachs stated in a report, raising its H1 2026 LME copper price forecast from $11,525 to $12,750 per tonne, citing tightening inventories outside the US due to fund inflows and supply流向 the US. However, the bank maintained its Q4 2026 forecast of $11,200 per tonne unchanged, implying significant downward pressure on prices in the second half of the year. Can "Aluminum Substituting for Copper" alleviate high copper prices? Against the backdrop of持续 rising copper prices and an imbalanced supply-demand格局, "aluminum substitution for copper" is quietly becoming an option for more industries. Copper is a key raw material for air conditioners, and rising copper prices significantly impact the terminal AC market. Last December, 19 air conditioning companies, including Haier, Midea, Hisense, Aux, and Xiaomi, jointly announced their participation in an aluminum strengthening application self-discipline convention, prohibiting malicious attacks and promoting the characteristics of aluminum heat exchanger air conditioners scientifically. These companies joined the convention also because, after the copper price increase, they hope to compress costs through "aluminum substitution for copper" to ensure the security of the air conditioning industry chain. In fact, several industries are gradually implementing "aluminum substitution for copper." Firstly, in power transmission, aluminum substitution for copper has entered a mature application stage. For a long time, aluminum conductors (aluminum conductor steel-reinforced) have completely replaced copper conductors in long-distance transmission lines and are widely used in power supply for 5G base stations and data centers. Secondly, the automotive industry is one of the most technically challenging but fastest-progressing areas for "aluminum substitution for copper." In August 2025, TE Connectivity and BoWei Alloy announced they had overcome the technical challenges of "aluminum substitution for copper," developing a new aluminum alloy material that彻底解决了电化学腐蚀问题 and optimized creep performance to接近纯铜水平. However, many interviewed experts caution that while "aluminum substitution for copper" seems like a shortcut, its actual implementation still faces many obstacles. Hu Daoheng stated that "aluminum substitution for copper" is unlikely to see effective progress in the short term. Taking the home appliance industry as an example, the bottlenecks for replacing copper tubes with aluminum tubes in domestic household air conditioner heat exchangers include aluminum's lower thermal conductivity leading to higher power consumption, poorer corrosion resistance leading to leakage risks, and the high difficulty of aluminum welding leading to higher after-sales costs, among others.
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