According to Nonferrous Metals Network, copper prices rose steadily in April, with the Shanghai copper price once again breaking through the 100,000 RMB/ton mark; the US and Iran reached a temporary ceasefire agreement, causing international oil prices to fall significantly from their highs at one point, which improved market sentiment and boosted copper prices. Subsequently, with the first round of US-Iran negotiations ending in deadlock and the second round put on hold, oil prices returned to high levels, and copper prices came under renewed pressure from macroeconomic factors. From a fundamental perspective, the turmoil in the Middle East has triggered a global shortage of sulphuric acid, whilst production cuts at overseas mines and hydrometallurgical enterprises have provided strong support for copper prices.

Copper ore supply shortages intensify

In February, China’s copper concentrate output stood at 113,400 tons, down 14.82% month-on-month and 9.33% year-on-year. In March, China imported 2.63 million tons of copper ore and concentrates, up 13.84% month-on-month and 9.86% year-on-year.

Regarding inventories, as of 24 April, the processing fee for imported copper concentrate stood at -$81.44 per ton, with prices continuing to trend downwards; copper concentrate stocks at China’s nine major ports totaled 620,400 tons, a decrease of 28,100 tons from the previous week.

In March, China’s scrap copper output was 184,000 metric tons, down 8.82% month-on-month. Of this, production of old scrap copper was 154,400 metric tons, down 8.42% month-on-month; production of new scrap copper was 29,600 metric tons, down 10.84% month-on-month. In March, China imported 227,600 physical tons of copper scrap and shavings, up 35.5% month-on-month and 19.94% year-on-year.

On 24 April, the price differential between refined copper and scrap stood at 1,768 RMB/ton, with a reasonable differential of 1,724 RMB/ton. The price differential narrowed during the month, primarily due to a significant shortfall in the domestic supply of recycled copper feedstock, with domestic trading prices remaining firm.

In March, China’s sampled anode copper output stood at 128,100 tons, representing a month-on-month increase of 32.32% but a year-on-year decrease of 9.06%. Of this, mineral-based anode copper amounted to 57,800 tons, remaining unchanged from February; scrap-based anode copper totaled 70,300 tons, marking a month-on-month increase of 80.17%.

In March, China imported 68,800 tons of anode copper, representing a month-on-month increase of 20.97% and a year-on-year rise of 37.1%. Entering the second quarter, the price differential between refined and scrap copper has narrowed, whilst policy uncertainties in the recycled copper sector have led to a decline in domestic supply of scrap-derived crude copper and anode plates, thereby boosting market demand for imported anode copper. Concurrently, following the commencement of operations at the Kamoa mine, related shipments have been arriving in concentrated volumes since April. It is anticipated that China’s imports of anode copper will increase during the second quarter. However, due to rising energy costs, uncertainties remain regarding power supply and logistics capacity in the African region.

In March, China’s electrolytic copper output stood at 1.2061 million tons, representing a month-on-month increase of 5.58% and a year-on-year rise of 7.49%. During the month, copper concentrate processing fees continued to decline, and the spread between refined and scrap copper prices narrowed significantly. However, the output of anode plates produced from scrap has not yet been significantly affected, and electrolytic copper production has not seen a substantial reduction due to raw material supply issues. Sulphuric acid prices reached an all-time high, with quotations in some regions as high as 1,600 RMB/ton, prompting smelters to maintain high operating rates despite deeply negative processing fees.

In April, a total of eight smelters entered maintenance cycles. Of these, maintenance at three smelters continued from March into April, whilst maintenance at four smelters extended from April into May; the production shortfall resulting from these maintenance periods is expected to be concentrated in May. Currently, a few smelters have reported increased difficulty in procuring anode plates, and a tightening of raw material supplies is gradually becoming apparent. Electrolytic copper output in April is forecast to decline by 33,000 tons month-on-month, though the full impact of maintenance has not yet been fully reflected in the short term. Furthermore, one smelter officially commenced operations in April, with subsequent capacity set to be gradually released. As the concentrated maintenance schedule for electrolytic copper enterprises takes effect in May, output for that month is expected to continue its downward trend compared to April.

Regarding imports and exports, in March, China imported 234,600 tons of electrolytic copper, representing a month-on-month increase of 53.33% but a year-on-year decrease of 24.03%; exports stood at 58,200 tons, down 25.6% month-on-month and 14.4% year-on-year; in March, China recorded a net import of 176,400 tons of electrolytic copper.

Marginal recovery in end-user consumption

In February, China’s copper product output stood at 1.589 million tons, down 11.79% month-on-month but up 1.88% year-on-year. The overall operating rate in the domestic copper products sector was 42.81% in February, rising to 68.51% in March.

By sector, in March, operating rates across downstream copper industries showed a seasonal recovery, with the refined copper rod and copper sheet, strip and foil sectors performing particularly well, recording operating rates higher than the average for the same period in recent years.

In the power sector, from January to February, investment in national power grid construction projects reached RMB83.8 billion, a year-on-year increase of 79.84%; investment in power generation projects reached NY104.4 billion, a year-on-year increase of 32.35%.

In the automotive sector, from January to March, China’s automobile production and sales stood at 7.039 million and 7.048 million units respectively, representing year-on-year decreases of 6.9% and 5.6%. During the same period, new energy vehicles

Looking at individual sectors, in March, production activity across copper downstream industries showed a seasonal upturn, with the refined copper rod and copper sheet, strip and foil sectors performing particularly well, recording utilization rates higher than the average for the same period in recent years.

In the power sector, from January to February, investment in national power grid construction projects reached RMB83.8 billion, a year-on-year increase of 79.84%; investment in power generation projects reached RMB 104.4 billion, a year-on-year increase of 32.35%.

In the automotive sector, from January to March, China’s automobile production and sales stood at 7.039 million units and 7.048 million units respectively, representing year-on-year decreases of 6.9% and 5.6%. During the same period, production and sales of new energy vehicles reached 2.965 million units and 2.96 million units respectively, down 6.8% and 3.7% year-on-year. New energy vehicle sales accounted for 42% of total automobile sales.

In the household appliances sector, from January to March, cumulative domestic production of air conditioners reached 74.58 million units, up 3.8% year-on-year; refrigerator production stood at 27.22 million units, up 9.4% year-on-year; and washing machine production reached 30.61 million units, up 2.7% year-on-year.

In the property sector, from January to March, the floor area of new housing starts nationwide stood at 103.73 million square meters, down 20.3% year-on-year; the floor area of completed housing was 97.89 million square meters, down 25.0% year-on-year.

Regarding inventories, as of 23 April, LME copper stocks stood at 393,000 tons, with the recent upward trend slowing and a slight decline, whilst cancelled warrants accounted for 12%; COMEX copper stocks stood at 606,000 tons, returning to a growth trajectory. As of 27 April, domestic copper social stocks stood at 248,600 tons, continuing the trend of destocking. From a global perspective, as of 23 April, global copper stocks stood at 1.246 million tons, an increase of 650,000 tons compared with the same period last year.

Market sentiment remains cautious

Since the escalation of the US-Iran conflict on 28 February, international crude oil prices have repeatedly breached the $100 per barrel mark, fuelling expectations of global stagflation and exerting downward pressure on copper prices. Currently, the second round of US-Iran negotiations has been put on hold, the situation in the Middle East remains complex, and the Strait of Hormuz remains blocked. Against the backdrop of a global shortage of sulphuric acid, the supply side of the copper market has been significantly disrupted.

Looking ahead to May, on the macroeconomic front, the stalemate in the Middle East persists, the second round of US-Iran negotiations has been put on hold, and oil prices remain at elevated levels, with market sentiment generally cautious. On the fundamentals, domestic copper concentrate shortages are intensifying, whilst the markets for scrap copper and crude copper are simultaneously tightening. Global sulphuric acid supply remains tight, and the risk of production cuts or shutdowns at overseas copper mines and hydrometallurgical plants is rising. With domestic smelters scheduled for concentrated maintenance in April and May, output is expected to decline. On the demand side, following the high copper prices, downstream sectors are primarily engaging in procurement based on essential needs, whilst the industry’s traditional peak season is supporting operating rates to remain at seasonally high levels.

Overall, copper prices are currently influenced by a combination of macroeconomic factors and fundamentals, with both the situation in the Middle East and overseas copper supply exhibiting relatively weak resilience. Provided the situation in the Middle East does not deteriorate significantly, the supply side is expected to provide strong support for copper prices. It is anticipated that copper prices will remain at elevated levels in May, with scope for the price centre to shift upwards.

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