SunSirs: Widening Supply-Demand Gap to Drive Copper Prices to New Heights

According to China Energy Network, copper prices have reached historic highs. On one hand, supply shortages provide solid bottom support for prices, while on the other, sluggish traditional demand and macroeconomic headwinds add upward resistance.

On the supply side, tight mine supply and squeezed smelting margins create dual constraints. Global output from major copper mines plunged 4.7% year-on-year in Q3 2025, with disruptions persisting in key production regions. Peru's Antamina mine saw production plummet 26%; the Kamoa-Kakula project in the Democratic Republic of Congo (DRC) reduced its 2025 output forecast by 28%; Indonesia's Grasberg copper mine halted operations due to a mudslide, resulting in an annual production loss of 250,000–260,000 tons, with resumption potentially delayed until 2027. According to the International Copper Study Group (ICSG), global copper mine output grew by only 1.4% in 2025, creating a supply-demand gap of 150,000 tons, which is projected to widen to 300,000 tons in 2026.

Copper concentrate treatment charges (TC) hit their lowest level since 1992, with 2025 long-term TC contracts at just $21.25/ton—a 73.4% decline from 2024. Spot TCs have already fallen into negative territory. This indicates extreme tightness in the global copper concentrate market, with smelting capacity now exceeding ore supply. Chinese smelters have not yet implemented large-scale production cuts in 2025, primarily due to favorable profits from byproducts like sulfuric acid. However, if byproduct prices decline further, smelter output reductions could constrain electrolytic copper production. Affected by increased maintenance-related production cuts at smelters and persistently low copper concentrate processing fees, China's electrolytic copper output declined month-on-month by 4.31% and 2.62% in September and October 2025, respectively. The China Nonferrous Metals Industry Association recently proposed setting production caps for key metals like copper, lead, and zinc to prevent “disorderly expansion” and “price wars” from further eroding industry profits.

On the demand side, since the second half of 2025, domestic production schedules for air conditioners and refrigerators have both begun to slow year-on-year. Overseas sales showed strong performance in the first quarter, but production schedules for exports have trended downward since April. Three main factors contribute to this: first, the peak overseas inventory build-up period has passed, and the market is gradually entering a destocking phase; second, the production base for exports was relatively high during the same period last year; and third, exports face tariff pressures.

The power and new energy sectors provided robust support. The power sector accounts for 40%–50% of copper demand, serving as the “ballast” for global copper consumption. From January to September 2025, China's new photovoltaic installations, new wind power installations, and new energy vehicle production increased by 46.76%, 59.40%, and 34.98% year-on-year, respectively. Overall, copper demand in the power and new energy sectors effectively offset the drag from declining demand in traditional real estate, maintaining resilience in copper's end-use demand.

From a macro perspective, copper prices exhibit high sensitivity to global GDP growth expectations.

In summary, over the medium to long term, as the supply-demand gap widens and room for interest rate cuts opens up, copper prices breaking through historical highs may be only a matter of time.

As an integrated internet platform providing benchmark prices, on November 21, the benchmark price of copper on SunSirs was 86,461.67 RMB/ton, a decrease of 1.29% compared with the beginning of the month (87,595.00 RMB/ton).

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