According to China Nonferrous Metals News, LME copper prices currently hover near historic highs. In the short term, caution is warranted against potential price corrections, as the Federal Reserve's hawkish stance may intensify profit-taking among long positions. However, from a long-term perspective, AI-driven demand could reshape copper's pricing logic, potentially elevating its price center.

Since late September, SHFE copper has demonstrated a pronounced upward trend with increasing positions, driven by expectations of accommodative macro policies and concerns over copper ore supply contraction. Entering mid-October, heightened volatility at elevated price levels intensified amid unstable external conditions. In mid-to-late October, as market risk appetite recovered, SHFE copper prices resumed their upward trajectory, consecutively breaking through both the yearly and five-year highs. However, by late October, the Federal Reserve's hawkish signals during its policy meeting, coupled with London copper prices already at elevated levels, triggered a temporary pullback in copper prices.

Industry Policy Support

From a macroeconomic perspective, the Federal Reserve has initiated a series of interest rate cuts, and global monetary policy has simultaneously shifted toward a cycle of easing, creating a favorable financial environment for copper prices. Historical experience shows that during the latter stages of a rate-cutting cycle, improved liquidity conditions and heightened market expectations for economic recovery often resonate, frequently driving copper prices into a trend-driven upward movement. Currently, the global economy remains in the early phase of this rate-cutting cycle, suggesting copper prices may still have significant upside potential.

Concurrently, China's ongoing macroeconomic growth stabilization policies, coupled with industrial policies targeting overcapacity in copper smelting to curb “internal competition,” collectively establish a solid foundation supporting copper prices.

First, it provides a bottom support for copper prices. Strictly controlling new capacity helps optimize market supply-demand balance from the supply side, building a more robust long-term foundation for copper prices. This aligns with the national push toward high-end, intelligent, and green development in the industry.

Second, it accelerates industry consolidation. Policies will drive resource concentration toward technologically advanced, environmentally compliant leading enterprises, expediting the exit of inefficient capacity. This will enhance the sector's international competitiveness and sustainable development capabilities.

Demand Emerges with New Growth Drivers

On the supply side, major copper mines globally faced significant production disruptions in Q3, intensifying expectations of tightening copper ore supply. Consequently, the International Copper Study Group (ICSG) significantly lowered its global copper mine production growth forecast in its October report, predicting a supply gap of approximately 150,000 metric tons in the global copper market by 2026. This projection completely reversed previous assessments of copper market oversupply. This pivotal shift in expectations became the catalyst for the current copper price surge.

On the demand side, structural transformation is underway, with the most disruptive driver stemming from revolutionary demand for AI computing infrastructure. Compared to traditional servers, AI servers consume significantly more copper per unit (roughly several times that of conventional servers). Driven by these market expectations, shares of several listed companies in the copper processing sector have seen notable gains in the second half of the year. However, actual copper usage in the AI sector remains relatively limited, and uncertainties persist between projected demand and its materialization.

The key distinction between this copper price surge and the 2024 market dynamics lies in the current relatively high overseas copper inventories, which exert some downward pressure on short-term prices. Nevertheless, this rally is fueled by AI demand, and the AI-driven demand narrative is propelling copper's transformation from a “traditional industrial metal” to a “strategic resource of the digital age.” This shift holds the potential to systematically reshape its long-term pricing logic and drive a sustained upward shift in its price center.

As an integrated internet platform providing benchmark prices, on November 14, the benchmark price of copper on SunSirs was 87,301.67 RMB/ton, a decrease of 0.33% compared with the beginning of the month (87,595.00 RMB /ton).Application of SunSirs Benchmark Pricing：

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