SunSirs: Copper Prices Are Likely to Rise First and Then Fall Next Year

This year, copper prices have performed strongly. Although there have been negative macroeconomic factors from overseas, these have only affected copper prices in the short term. Looking at the specific price movements, copper prices experienced their first upward trend in the first quarter, followed by a smoother second upward trend in mid-April, and then accelerated their rise towards the end of the year.

In the first half of this year, frequent macroeconomic disturbances occurred overseas, and U.S. tariff policies were volatile and unpredictable. Affected by this, market expectations for a Federal Reserve interest rate cut continuously declined, and copper prices exhibited a more pronounced financial characteristic. After the U.S. implemented "reciprocal tariffs," market panic quickly intensified, global risk assets plummeted, and the non-ferrous metals sector was not spared, with copper prices also falling sharply. After May, global trade frictions gradually eased, and the market became increasingly concerned about the inflationary pressure caused by U.S. tariffs, significantly impacting market judgments on the pace of Federal Reserve interest rate cuts. To date, the Federal Reserve has cut interest rates by 25 basis points in both September and October, and after the expected rate cut in December, the cumulative rate cut for the year reached 75 basis points.

In 2026, the Federal Reserve will hold eight monetary policy meetings, scheduled for the end of January, mid-March, end of April, mid-June, end of July, mid-September, end of October, and early December. Based on the Fed's interest rate dot plot and the inflationary effects of US tariffs, while the Fed will still be in a rate-cutting cycle in 2026, the scope for further rate cuts is expected to be limited. The bottom of the US dollar index in this rate-cutting cycle has already been reached, which will have a negative impact on copper prices.

Raw material supply is tight

This year, the supply of copper concentrate is unlikely to be abundant. SMM data shows that import copper concentrate processing fees turned negative in the week of January 24th and continued to decline, reaching -40 USD/dry ton by the end of April. In the second half of this year, uncertainties in overseas mine operations increased significantly. For example, in early August, an earthquake in Chile caused casualties at Codelco's El Teniente copper mine; in early September, a large-scale wet ore surge occurred in a production area of Freeport's Grasberg underground mine. Several mining companies, including Glencore and Anglo American, lowered their copper concentrate production forecasts for the year. Although some smelters underwent large-scale maintenance from September to November, processing fees continued to hover at the year's low level of -40 USD/dry ton. Considering the constraints on copper concentrate supply and the implementation of domestic "anti-overcapacity" policies, the supply of copper concentrate in 2026 is unlikely to be abundant. If the prices of smelter by-products weaken, it may lead to reduced production and further decrease the global supply of copper concentrate.

Consumer spending remains stable

This year, the production situation of domestic cable companies differs somewhat from previous years. Cable companies only engaged in significant centralized raw material procurement around April; for most of the rest of the year, they maintained a just-in-time purchasing model.  Therefore, the demand for copper from the cable sector was relatively limited and did not show any significant seasonal characteristics. In the air conditioning industry, the trade-in policy has been effective, and in the first quarter, the air conditioning industry continued its positive momentum, with production significantly increasing compared to the same period last year. Furthermore, this year, the automotive industry has seen optimistic production and sales figures, with new energy vehicle production and sales experiencing rapid growth.

2026 will be the first year of the 15th Five-Year Plan, and demand for copper in the power sector is expected to grow steadily. Demand from the air conditioning industry is projected to decrease, while the production and sales of new energy vehicles will continue to grow rapidly. The automotive industry will remain the strongest driver of end-use copper demand.

In summary, copper prices in 2026 are expected to experience a volatile trend, initially rising before declining.

As an integrated internet platform providing benchmark prices, on December 18th, SunSirs’ benchmark price for copper was 92,196.67 RMB/ton, an increase of 5.48% compared to the beginning of the month (87,403.33 RMB/ton).

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