I. Trend Analysis
| Gamma-PGA (gamma polyglutamic acid) |
According to data monitored by the Business Society, copper prices surged significantly this week. By the 12th, the price reached 93,903.33 yuan per ton, hitting a 15-year high. This marks a 2.6-fold increase from the low point in June 2016 and a nearly 27.19% rise year-to-date.
The piles of copper in U.S. warehouses are higher than mountains
The copper stockpiles in U.S. warehouses are higher than mountains, while factories in the rest of the world are nearly running out of supplies. The copper inventory at the U.S. Comex warehouse has surged to over 400,000 tons, a 300% spike from the beginning of the year. Meanwhile, in regions outside the U.S. that consume 90% of the world’s copper, inventory shortages have forced some factories to cut production. A global resource reallocation triggered by unilateral U.S. policies is unfolding. In February, the U.S. introduced measures likely to impose tariffs of up to 50% on imported copper by 2026. As soon as the policy was announced, traders rushed to secure supplies, diverting copper originally destined for Asia back to the U.S.
Mokorey plans to withdraw 40,000 tons of copper from the LME Asia warehouse
Swiss commodities trader Mercuria has notified its plans to withdraw over 40,000 tons of copper from warehouses in Asia at the London Metal Exchange (LME). This withdrawal will reduce the exchange’s inventory by more than half, potentially causing a severe shortage in the global copper market.
The Federal Reserve cut interest rates by 25 basis points as expected
On December 10 local time, the Federal Reserve announced a scheduled 25-basis-point interest rate cut, marking the third reduction of the year. Starting Friday, the Fed resumed purchasing short-term treasury bonds, reigniting the expansion of its balance sheet. This move has heightened expectations for global liquidity easing, which is favorable for copper prices.
fundamentals
Global supply remains tight
Major mine production continues to be disrupted, compounded by the U.S. siphoning effect, which has led to a steady influx of copper inventory into the U.S. market, heightening concerns about supply shortages in non-U.S. regions. Leading market institutions remain optimistic, projecting that LME copper prices will remain above $11,000 per ton in 2026, potentially approaching $12,000 by year-end, while Shanghai copper prices are expected to near 96,000 yuan. Currently, global mines face numerous adjustments, with short-term supply growth constrained, low ore grades, and significant challenges in investment and extraction.
Demand side
The global energy transition, the widespread adoption of electric vehicles, and grid upgrades are accelerating the expansion of copper demand, with promising prospects for demand and a further widening supply gap. Downstream players are adopting a wait-and-see approach amid high prices, while mandatory procurement and weekend restocking needs remain limited, resulting in insufficient market buying interest.
LME copper inventory falls
Recently, LME copper inventories experienced a slight decline. As of the 12th, LME copper inventories stood at 158,375 tons, down 3.75% from the beginning of the week.
Market Outlook:
In summary, on the raw material side, the copper concentrate processing fee index has fallen again. Chile has raised the premium for copper spot prices in China, and domestic CSPT members will reduce copper mining capacity by 10% next year, exacerbating market concerns about tight copper supply. On the demand side, supported by expectations of overseas interest rate cuts and raw material costs, copper prices remain strong. In the short term, high copper prices have suppressed downstream purchasing sentiment, and downstream attitudes have become cautious, mainly focusing on restocking for essential needs. The supply gap in non US regions continues to widen, with domestic copper inventories continuing to decline and the Federal Reserve cutting interest rates. However, high prices limit downstream procurement, and it is expected that copper prices will still have room for upward movement, with strong volatility.
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