LME copper inventory warrants saw massive cancellations, driving short-term price surges and highlighting supply tightness outside the U.S. On December 3, LME copper warrants were canceled for 56,900 tons, accounting for about 35% of total inventory—the largest single-day withdrawal since 2013. This intensified market expectations of near-term supply shortages, pushing copper prices higher, with Shanghai copper prices surpassing CNY 90,000 per ton.
Chile’s Codelco significantly raised its COMEX-LME copper premium in its 2026 long-term contract pricing, reflecting concerns over potential U.S. tariffs and supply constraints. The premium of COMEX copper over LME benchmark prices has attracted inventory flows to the U.S., exacerbating supply tightness in non-U.S. regions, which may continue supporting copper price gains.
**Mine Disruptions and Tariff Fears Lift Price Floor; Supply Tightness Remains Key Driver** Since 2025, frequent disruptions in copper mine supply have led to cumulative production guidance cuts exceeding 500,000 tons. On December 3, Glencore, the world’s sixth-largest copper producer, announced its 2025 output forecast of 850,000–875,000 tons, down 40% from 2018 levels, and further reduced its 2026 outlook due to mine accidents.
Orient Securities believes aging global grid upgrades will anchor copper demand in traditional power transmission, while emerging sectors like renewable energy and AI data centers will further boost consumption. With mine disruptions limiting 2025 supply growth, tight supply remains the mid-term driver for higher copper prices.
**"Anti-Internal Competition" Measures to Curb Smelting Expansion; Dual Rise in Prices and Fees Expected** China Nonferrous Metals Industry Association recently opposed unsustainable structural imbalances between mining and smelting that lead to zero or negative processing fees, signaling stricter controls on new copper smelting capacity. On November 28, the China Smelters Purchase Team (CSPT) announced self-regulatory measures, including a 10% reduction in 2026 copper concentrate processing capacity and mechanisms to prevent malicious competition, reinforcing expectations of policy-driven smelting capacity cuts.
The bank expects the mining-smelting imbalance to ease under these measures, stabilizing smelting fees and creating a scenario where both copper prices and smelting fees rise. It remains bullish on investment opportunities in mining and smelting.
**Investment Recommendations** *Mining Sector*: Focus on Zijin Mining (601899.SH, Buy) for its large reserves and expansion potential. Other targets: CMOC (603993.SH, Not Rated), JCHX Mining (603979.SH, Not Rated). *Smelting Sector*: Tongling Nonferrous (000630.SZ, Buy), a top smelter with rising self-sufficiency from the Mirador mine. Other targets: Jiangxi Copper (600362.SH, Not Rated).
**Risks**: Macroeconomic volatility dampening demand, ineffective anti-competition measures, or unexpected mine supply surges leading to oversupply.
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