Price trend

According to data monitored by SunSirs, copper prices rose initially last week before falling. As of the 6th, the price of copper was 100,035 RMB/ton, a decrease of 0.81% compared to the beginning of the week, but a year-on-year increase of 31.01%.

According to the weekly price fluctuation chart from SunSirs, copper prices have fallen for 6 weeks and risen for 6 weeks over the past three months, with a slight decrease last week.

Market analysis

LME copper inventories

According to data released by the London Metal Exchange (LME), LME copper inventories rose slightly, reaching 180,575 tons by the end of the week, a 3.4% increase compared to the beginning of the week.

Macroeconomic factors: US ADP employment increased by only 22,000 in January, dampening market expectations for a Federal Reserve interest rate cut. The US dollar index rebounded to nearly 98, putting downward pressure on dollar-denominated copper prices.

Supply side: Factors such as declining production from old mines, long development cycles for new mines (averaging 7-10 years), and rising ESG costs will limit the growth of copper mine production. The global supply-demand gap for copper concentrate may widen to 500,000 tons by 2025, supporting an upward shift in the average copper price.

Demand side: As the Spring Festival approaching, domestic copper processing enterprises were gradually entering a period of production suspension and holidays. Operating rates in downstream industries such as wires and cables, copper pipes, and copper plates and strips continued to decline. Last week, the operating rate of domestic copper rod enterprises fell to 58%, a decrease of 12 percentage points compared to the peak in January. Although some companies engaged in "pre-holiday stockpiling," the recent decline in copper prices (down more than 5% from the January high) had not significantly stimulated purchasing demand.

Market outlook:

In summary: From a long-term perspective, copper prices still have a solid foundation for further increases. Regarding overseas mines, the closure of old mines and delays in the commissioning of new mines are common, leading to a tight supply of copper concentrate. Processing fees have fallen to extremely low levels, which fully demonstrates the relative scarcity of copper resources. Meanwhile, the rapid development of new energy vehicles and the rise of artificial intelligence were driving continuous growth in copper demand. Therefore, the pullback in copper prices can be seen as a temporary correction after a sharp rise, and prices are expected to fluctuate at high levels in the future.

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