Global copper supply disruptions and regional refined copper imbalances, coupled with expectations of loose liquidity, are expected to sustain rising copper prices, according to a research report by China Galaxy Securities. Investors are advised to focus on leading domestic copper mining companies.
Frequent disruptions at major copper mines this year have led to continuous downward revisions in global copper production forecasts for 2025, shrinking from an initial expected increase of over 700,000 tons to nearly zero growth. Meanwhile, global copper output growth for 2026 is projected at just over 500,000 tons. With significant smelting capacity under construction or planned globally, the copper ore deficit may widen further in 2026.
Recent data shows LME copper registered inventories at 105,275 tons as of December 3, down 32.3% year-on-year, while canceled warrants surged 802.78% to 56,875 tons—a record high since 2013, driven primarily by withdrawals from warehouses in Taiwan (China) and South Korea. LME three-month copper prices jumped nearly 3% intraday on December 3, hitting a historic peak of $11,540/ton, extending November’s upward trend. Shanghai copper futures breached the 90,000 yuan/ton threshold on December 4, reaching 91,450 yuan/ton intraday before settling at 90,980 yuan/ton, up 2.3%.
**Key Insights from China Galaxy Securities:** 1. **U.S. Tariff Risks Exacerbate Regional Imbalances:** Potential U.S. tariffs on refined copper imports under review by 2026 could widen the premium for U.S. copper, distorting global inventory flows and tightening supply in non-U.S. markets.
2. **Chile’s Codelco Signals Tight 2026 Supply:** The state-owned miner sharply raised 2026 refined copper premiums: - China: $335–350/ton (+275% vs. 2025) - Europe: $325–345/ton (+39%) - South Korea: $330/ton (+288%) This reflects anticipated trade shifts and regional shortages, evidenced by surging LME Asian warehouse withdrawals.
3. **Mine-Smelter Tensions Intensify:** With 2026 global copper ore growth limited to ~500,000 tons and smelters competing for concentrate, TC/RC benchmark rates may plummet from 2025’s $21.25/ton toward zero or negative. China’s CSPT recently agreed to cut ore processing capacity by 10% to strengthen smelters’ negotiation leverage. Potential policy curbs on new smelting projects could further strain refined copper supply.
4. **Scrap Copper Fails to Fill the Gap:** U.S. scrap exports to China plunged 62% YoY in Jan–Oct 2025 due to tariffs, with alternative routes via Japan (+59,000 tons) and Thailand (+117,000 tons) proving insufficient. Domestic policy uncertainties also constrain scrap-based anode supply.
5. **Demand Drivers Remain Robust:** China’s post-pandemic recovery supports steady copper consumption, while U.S. manufacturing reshoring, green energy, and AI infrastructure boost global demand. Expectations of Fed rate cuts in December and a Trump-aligned chair appointment in 2026 reinforce loose liquidity tailwinds for prices.
**Risks:** 1. Slower-than-expected Chinese economic recovery 2. Delayed Fed rate cuts 3. Sharp declines in nonferrous metal prices 4. Escalating U.S.-China tariff conflicts
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