The core factors behind the rise in copper prices
1. Global copper mine supply continues to contract, intensifying mining and metallurgical conflicts
Global copper mining capacity gap widens:
Major copper mine production declines: Codelco in Chile (the world's largest copper mine) will see a 3% year-on-year decrease in production in 2025;
The production of Antamina mine in Peru plummeted by 26%; The Kamoa Kakula project in the Democratic Republic of Congo will reduce its production by 28% in 2025;
The Grasberg copper mine in Indonesia has been shut down due to mudslides, resulting in a loss of 250000 to 260000 tons.
The production of the top 20 copper mines in the world decreased by 6.5% year-on-year in the third quarter, and the growth rate of new copper mine capacity in 2025 is less than 2%, far below the growth rate of demand.
The smelting end is forced to reduce production:
China's CSPT has reached a consensus to reduce production by more than 10% by 2026, affecting over 1 million tons of production capacity.
The copper concentrate processing fee (TC/RC) has fallen to the negative range, and smelters are paying a discount for every ton of copper processed, seriously affecting production enthusiasm.
The China Nonferrous Metals Industry Association has suspended approximately 2 million tons of illegal smelting capacity.
2. Structural explosion on the demand side, emerging industries becoming "copper consumption engines"
Explosion in the field of new energy:
New energy vehicles: The amount of copper used per vehicle is 3-4 times that of traditional vehicles. By 2025, global electric vehicle sales will continue to grow, contributing to the core increase in copper demand.
Photovoltaic/Wind Power: Global photovoltaic installed capacity continues to grow rapidly, with approximately 5000 tons of copper required per GW of photovoltaic power and 5 tons of copper required per MW of wind power.
Power grid upgrade: Global investment in power system transformation accelerates, providing a stable 'copper consumption base'.
The AI computing revolution has given rise to new demands:
The construction of AI data centers has exploded, and a single ultra large data center requires copper in the tens of thousands of tons. From 2025 to 2030, the global average annual increase in copper consumption will be close to 800000 tons.
After the launch of the "Genesis Mission" AI program in the United States, the demand for high-purity copper in supercomputing centers has surged.
3. The expectation of US tariffs triggers a global "copper rush" and structural transfer of inventory
''American Black Hole'' Effect:
Market expectations suggest that the United States may impose up to 25% tariffs on imported copper (reassessed in 2026), triggering global traders to engage in "arbitrage"
From March to May 2025, over 540000 tons of refined copper will be urgently shipped to the United States, equivalent to 60% of the annual import volume.
COMEX copper inventory in the United States surged from the regular 70000 tons to 400000 tons (a 300% increase), accounting for 62% of the total inventory on the world's three major exchanges, while actual consumption in the United States only accounts for 7% of the global total.
Asian inventory 'depleted':
LME's Asian warehouse inventory was' drained ', and on December 6th, Mercuria extracted 40000 tons of copper from the Asian warehouse in one go, setting a record for single day delivery.
LME copper cancellation warehouse receipts (ready for delivery) surged by 802.78%, accounting for 35% of total inventory, indicating extreme shortage of spot goods.
There is a shortage of spot supply in the Asian region (especially in China), and Backwardation has expanded to $88/ton, the highest in the past two months.
4. Expectations of loose macro liquidity, weak US dollar pushing up copper prices
Expectations of Federal Reserve interest rate cuts:
The market has a probability of 89.5% that the Federal Reserve will cut interest rates by 25 basis points in December. With the upcoming interest rate meeting on December 17th, expectations of loose liquidity have strengthened.
The Federal Reserve may shift from "shrinking balance sheet" to "expanding balance sheet" to provide support for commodity prices
The depreciation of the US dollar:
Since the beginning of this year, the US dollar index has fallen by 8%, and copper denominated in US dollars is more attractive to holders of other currencies, stimulating global buying
Investors use copper as a tool to hedge against the decline in purchasing power of the US dollar, and copper's "financial attributes" are enhanced
5. Inventory shortages and delivery risks exacerbate market panic
Global explicit inventory is at a low level:
LME copper registered warehouse receipts have dropped to 105000 tons, a year-on-year decrease of 32.3%, and spot copper that can be freely delivered has sharply decreased
The social inventory of electrolytic copper in China is at a low level, and downstream enterprises urgently need to replenish their inventory
Spot premium expansion:
LME copper spot has expanded its three-month futures premium to $88/ton, the highest in nearly two months, reflecting the market's extreme thirst for spot copper
The strengthening of the spot premium pattern (Backwardation) means that the recent contract price is higher than the forward price, further stimulating the behavior of "grabbing goods"
6. Market speculative funds flood in, leading to a surge in long positions
Institutional bullish sentiment is high:
Citigroup raises copper price forecast to $13000 per ton (Q2 2026); UBS predicts that it may reach $12500 per ton; Multiple institutions including JPMorgan Chase have simultaneously raised their target prices
Long positions in LME copper futures have continued to rise since the fourth quarter of 2025, creating a resonance effect between speculative funds and industrial capital
Year end factor superposition:
At the end of the year, the factory entered a rush period, and the demand for copper and other raw materials was released in a concentrated manner, forming seasonal support
Some companies are concerned about further supply shortages next year, locking in inventory in advance and exacerbating short-term supply-demand imbalances
Summary: Triple Logic Resonance
The rise in copper prices today is essentially the result of the triple logic of "supply side contraction+macroeconomic easing+demand side structural growth", each of which provides strong support for the price.
