I. Trend Analysis
| Gamma-PGA (gamma polyglutamic acid) |
On December 29, the spot price of copper officially broke through the 100,000-yuan mark, reaching 101,053.33 yuan per ton, with a single-day increase of 3.24%. This is nearly three times the lowest price of 34,000 yuan since 2015 and represents a 36.87% rise from the year’s starting price of 73,830 yuan per ton. Citibank analysts even predicted that by 2026, copper prices are highly likely to surpass the 100,000-yuan threshold and set a new historic high! With just three days left before the new year, copper prices have already breached the 100,000-yuan mark, demonstrating an unstoppable momentum!
In the futures market, on the Friday night session of the 26th, the Shanghai copper futures traded on the Shanghai Futures Exchange broke through the 100,000 yuan mark for the first time in history, closing up over 3.3%. It closed firmly above the 100,000 yuan threshold, and on the 29th, the Shanghai copper futures remained firmly above 100,000 yuan during the day session. On the 26th Friday, New York copper futures showed even stronger gains, reaching over 5.8510 dollars per pound by the end of the session for the COMEX March futures contract, up nearly 5% from the previous day’s close. During U.S. stock market hours, it briefly surged to 5.8880 dollars per pound, surpassing the intraday high set during the unprecedented squeeze rally in July of this year, with a daily gain of 5.6%.
The recent surge in copper prices is the result of tight supply, rising demand, policy expectations, and financial speculation working in tandem.
The United States is hoarding copper frantically
The U.S. imposed a 50% high tariff on semi-finished copper tubes and wires while exempting raw copper ore from tariffs. This approach not only protects domestic copper processing enterprises but also allows the unimpeded import of large quantities of raw materials. Additionally, by requiring that 25% of domestically produced high-quality copper scrap be sold within the country, global copper resources are concentrated in the U.S. At the COMEX exchange in the U.S., copper inventories have piled up to a record 482,900 short tons, more than tripling from the beginning of the year. Over 60% of the copper inventories across the world’s three major exchanges are now stored in the U.S.
The global supply chain has been disrupted. Copper originally destined for Asia is now being rerouted to the United States. The copper price in the New York market is significantly higher than in London, yielding a net profit of several hundred dollars per ton after deducting transportation costs. As a result, copper supply in the Asian market has tightened, driving up spot price premiums.
Global copper mine black swan events occur frequently
In 2025, “black swan” events in global copper mining occurred frequently, including collapses in Chilean copper mines, production halts at Indonesian mining companies, and the unlikely resumption of Panamanian copper mines, resulting in a combined production reduction exceeding 3% of global output and a year-on-year decline of 220,000 tons. In 2026, global copper mining capacity additions fell short of 500,000 tons, with growth reaching only 1.4%, far lagging behind the 2.9% demand growth rate, creating a supply-demand gap of 180,000 tons. By 2027-2028, the gap will surge to 380,000 tons and 650,000 tons respectively, with the deficit widening further.
A comprehensive outbreak of new essential needs
The new rigid demand has exploded comprehensively, and the copper consumption of new energy vehicles is three to four times that of traditional fuel vehicles. An electric bus needs to use hundreds of kilograms of copper. AI computing power has become the biggest incremental dark horse, and copper is the “blood vessel” of computing power centers. A single high-end AI server uses 1520kg of copper, which is three times that of traditional servers. Liquid cooling systems and high-speed copper cables are indispensable, and the copper consumption for training a large model is comparable to 37 electric vehicles. The acceleration of global computing infrastructure in 2026 will drive a 45% surge in copper demand. What’s even more surprising is the humanoid robot race track, where a single robot uses 12kg of copper, and the joint motors and sensors are all supported by copper. After mass production and landing in 2026, there will be another wave of rigid demand.
The latest research by the IMF indicates that global oil demand will continue to decline in the next two decades, while copper demand will surge by 66% – copper is becoming the “industrial blood” of the new energy era. The global energy system is shifting from “combustion driven” to “current driven”, and all the foundations of electrification are copper. Based on this definition change, the current copper market has entered the era of “scarcity pricing”.
The decline of the US dollar drives up copper prices
The Bloomberg US Dollar Spot Index fell nearly 0.8% last week, marking its largest weekly decline since the week of June 27th, making dollar denominated raw materials cheaper for most buyers. The latest inflation data in the United States has cooled down, and the market generally predicts that the Federal Reserve will start cutting interest rates next year. When the Federal Reserve cuts interest rates, the US dollar usually weakens. For countries where we use Chinese yuan or other currencies, a weaker US dollar means we are buying things cheaper. Purchasing copper priced in US dollars reduces costs, which will stimulate more buyers to enter the market. A large amount of hot money poured into the copper market, adding fuel to this epic market trend.
The impact of copper price increase:
Chinese copper smelters are in talks with Chilean mining giant Antofagasta for cooperation next year, and the final copper concentrate processing fee has been confirmed to be “zero”! For example, if you open a flour mill and the farmers give you wheat, you can help them grind it into flour for free. You can’t earn a penny from processing fees, and can only rely on earning some hard-earned money from by-products such as wheat bran. The fact that smelters have all fallen to this point shows how tight the upstream copper ore is.
The days for power grid enterprises are tough. Last year, State Grid Corporation of China incurred additional costs of over 10 billion yuan due to the rise in copper prices, forcing the postponement of some rural power grid renovations and ultra-high voltage projects. The home appliance industry has also suffered, with copper accounting for 15% to 20% of the cost in air conditioning production. As copper prices rise, the cost of a single air conditioner increases by about 200 yuan, and ultimately these costs are passed on to consumers.
The cable industry uses an astonishing amount of copper, with copper materials accounting for 60% to 80% of production costs. The copper price has risen so much that manufacturers can’t bear it at all. The owner of a cable factory has calculated that for every 1000 yuan increase in copper prices, their cable cost per kilometer increases by several thousand yuan. How can we absorb the cost of copper prices, which have risen by over 35% since the beginning of the year? Either bear the losses themselves or raise prices to shift the pressure onto customers.
Overall, high copper prices are not a good thing. The trend of aluminum replacing copper is accelerating, and some industries have begun to study technical solutions to reduce copper usage. In the long run, there are no winners in the competition for resources.
Market forecast:
The soaring copper prices are the result of the combined effects of global supply shortages, explosive demand, and macro financial environment. This indicates that the pattern of the metal market is undergoing profound changes in the context of global resource competition and energy transformation. For our country, as the world’s largest copper consumer and manufacturing powerhouse, how to ensure the security of our supply chain and gain more say in this changing situation will be an extremely important issue. In the short term, copper prices have reached a historic high, with some profitable funds being cashed out and combined with year-end fund withdrawals, it is highly likely to enter a high volatility trend. But in the long run, the goal of 100000 is not the end point, but a new starting point, and the core logic of copper prices has never changed.
| http://www.lubonchem.com/ |