Trend Analysis

According to monitoring data from SunSirs, copper prices in April initially rose before fluctuating at a high level. At the beginning of the month, the price of copper stood at 96,953.33 RMB/ton; by the end of the month, it had risen to 101,498.33 RMB/ton, marking an overall increase of 4.69% and a year-on-year rise of 31%.

According to monitoring data from SunSirs, during the first half of April, spot copper prices exceeded futures prices—with the benchmark futures contract reflecting the anticipated price two months out—resulting in an upward trend in copper prices. In the latter half of the month, however, futures prices rose above spot prices, and the upward momentum subsequently lost steam.

According to LME inventory data, LME copper stocks rose initially before falling in April. By the end of the month, LME copper inventory stood at 399,725 tonnes, an increase of 10.6% compared to the beginning of the month.

Macroeconomic Outlook: The Federal Reserve maintained its "wait-and-see" strategy; its April interest rate decision aligned with market expectations (keeping rates unchanged). However, influenced by inflation expectations—driven higher by geopolitical conflicts—market expectations for interest rate cuts within the year have cooled significantly. Meanwhile, the U.S. Dollar Index continues to trade at elevated levels, exerting some downward pressure on copper prices. Economic data for the first quarter got off to a strong start, and the Manufacturing PMI for April rose by 0.1 percentage points month-on-month, remaining within the expansionary zone.

Supply Side: Since April, Treatment and Refining Charges (TCs) have continued their downward trend, plunging deep into negative territory. With TCs remaining negative for 16 consecutive months, smelters should—in theory—be implementing large-scale production cuts; however, in reality, domestic output has remained at elevated levels. The key to this paradox lies in the lucrative returns generated by sulfuric acid, a byproduct of the smelting process. Smelting one ton of copper yields approximately 3.5 to 4 tons of sulfuric acid; recently, sulfuric acid prices surged to 1,760 RMB/ton—a staggering 204% year-on-year increase—enabling pyrometallurgical smelters to sustain production despite facing "inverted" processing fees.

Due to the accelerated erosion of furnace linings caused by high-sulfur ores, maintenance shutdowns—typically scheduled for July and August—have been brought forward to the second quarter. By April, eight smelters had already entered their maintenance periods; in total, 13 smelters are expected to undergo maintenance, impacting aggregate production by approximately 224,000 tons. The estimated output of electrolytic copper for April stands at 1.1731 million tons—a month-on-month decrease of 2.7% but a year-on-year increase of 4.2%. Amidst tight supplies of copper concentrate and smelting losses, the scope and intensity of these maintenance shutdowns may exceed current expectations.

Downstream Sector: Amidst high copper prices, downstream processing enterprises exhibit a distinct "fear of heights"—hesitation to purchase at elevated levels. Consequently, procurement is largely limited to meeting immediate, essential needs, and the influx of new orders remains sluggish; the market is currently dominated by long-term contracts. However, the power sector stands out with impressive performance: investment in the power grid is surging (up 79.84% year-on-year in January–February), while investment in power generation sources rose by 32.35% year-on-year, serving as the primary pillar supporting domestic copper consumption. The projected operating rate for wire and cable manufacturers stands at 72.63%, marking a new high for the year. In the home appliance sector, aggregate production schedules for the three major categories of "white goods" totaled 37.64 million units in April—a 3.6% decline compared to the same period last year. The real estate sector remains lackluster, offering only limited impetus to copper consumption. Meanwhile, exports of the "New Three"—represented by photovoltaics, new energy vehicles, and lithium-ion batteries—continue to demonstrate strong momentum. By 2026, the share of copper demand from these emerging sectors is projected to reach approximately 25.44%, driving an estimated 810,000 tons of copper demand. Specifically, new energy vehicles are expected to drive 280,000 tons (up 16% year-on-year), AI data centers 270,000 tons (up 31%), energy storage systems 110,000 tons (up 58%), photovoltaics 80,000 tons (up 3%), and wind power 70,000 tons (up 12%). The construction of AI computing centers and the expansion of PCB production capacity have opened up new avenues for growth in copper consumption.

According to monitoring data from SunSirs, copper prices in May have exhibited a generally volatile trend over the past five years.

Market outlook

In summary, domestic smelters are entering a period of intensive maintenance during May and June. This coincides with persistent pressure from contractions in overseas hydrometallurgical operations, resulting in restricted output of refined copper; consequently, the slowdown in supply growth is expected to provide support for copper prices. Furthermore, China’s restrictions on sulfuric acid exports—implemented since May—may trigger a decline in sulfuric acid prices, thereby squeezing smelting margins. Should revenue from by-products fall significantly, it would reinforce expectations of production cuts among smelters, thereby providing structural support to copper prices. While demand intensity may experience a seasonal pullback following the "Silver April" peak season, the high-growth trend in power infrastructure investment persists, and copper demand for the construction of AI computing centers continues to ramp up. The depletion of domestic inventories remains the key indicator to watch for short-term price support. Looking ahead to May and the remainder of the second quarter, copper prices are expected to continue trading within a high-level, volatile range.

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