The reason for the continuous rise in copper prices
The copper price has seen a sharp rally, driven by three interlinked factors: persistent supply-side pressure, a new growth engine in demand, and a convergence of financial and policy expectations.
Core Driving Factors
1. Tightened Supply
Frequent production accidents in global copper mines (e.g., Chile, Indonesia, DRC) Smelter profit margins compressed due to smelting charges (TC/RC) dropping to historical lows
Contraction in refined copper supply as smelters reduce output
2. Structural Shift in Demand
Weakness in traditional sectors (e.g., real estate) Strong growth from new demand drivers:New energy vehicles (EVs) and wind/solar power (copper usage per EV is three times that of internal combustion engine vehicles)AI data centers and grid upgrades (high copper consumption in large-scale computing facilities)
3. Financial & Policy Expectations
Dovish Fed rate cut expectations and USD weakness enhance copper's attractiveness in USD-denominated markets,Concerns over potential US tariffs on copper have triggered global inventory hoarding and regional supply mismatches
Long-term Trend Support
1. Irreversible Green Transition
Copper is a key metal for energy transition. The IEA projects that copper demand in the clean energy sector will account for over 40% of global total demand by 2030.
2. Structural Supply-Demand Gap
Insufficient capital expenditure in global copper mines limits new capacity expansion.New energy demand is expected to grow at an annual rate of over 3%, indicating a persistent supply-demand imbalance.
Risk Warnings
1. Demand Suppression from High Prices
Rising copper prices may accelerate downstream substitution with alternative materials (e.g., aluminum)
2. Macro Policy Volatility
Shifts in Fed monetary policy or implementation of US tariff policies could trigger short-term price fluctuations
3. Uncertainty in Supply
If production resumption at major mines falls short of expectations, supply tightness may ease temporarily
