SunSirs: The Demand Was Undergoing a Shift Between Old and New Growth Drivers, and Copper Prices Are Expected to Rise in 2026

I. Trend analysis

According to data from SunSirs, in 2025, spot copper prices showed a volatile upward trend. The price started at 73,830 RMB/ton at the beginning of the year and rose to 99,180 RMB/ton by the end of the year, representing a 34.34% increase. The highest price of the year exceeded 100,000 RMB/ton (101,053.33 RMB/ton on December 29th), which was also the highest price in 15 years. The lowest point was 73,618.33 RMB/ton on April 8th, with a maximum fluctuation of 37.27%.

II. The main reasons for the increase in copper prices in 2025 are:

1. Frequent "black swan" events in the copper mining sector have led to the first production decline since 2020. Besides force majeure events such as earthquakes and mudslides, structural constraints have also become major contributing factors to the decline in copper supply, including declining resource grades, insufficient capital expenditure, slower approval processes for new projects, and environmental policy restrictions.

2. On the demand side, driven by both new energy and AI, copper consumption has shown far greater resilience than expected.

3. Due to the "siphoning effect" caused by anticipated US tariffs, the supply of refined copper in overseas non-US regions remains tight.

Supply Side

Domestic Copper Production Capacity and Output from 2011 to 2025

According to data, domestic copper production capacity and output have increased year by year since 2021. According to the National Bureau of Statistics, China's refined copper (electrolytic copper) production in November 2025 was 1.236 million tons, a year-on-year increase of 11.9%; from January to November, cumulative electrolytic copper production reached 13.323 million tons, a year-on-year increase of 9.8%.

Copper import and export data

Compared to 2024, copper imports decreased and exports increased in 2025. According to customs data, copper imports far exceeded copper exports. China's refined copper imports totaled 3.1031 million tons from January to November 2025, a decrease of 8.27% year-on-year. China's refined copper exports totaled 698,500 tons from January to November 2025, an increase of 58.46% year-on-year.

2025 LME Copper Inventory

In 2025, LME copper inventories showed overall high-level fluctuations. In previous years, there was an inverse relationship between inventory levels and copper prices, but this inverse relationship is not as evident this year. This indicates that copper prices are influenced by multiple factors. While previously heavily reliant on LME inventory levels, this year's price movements are driven by a combination of copper mine shortages, increased new demand, and the "siphon effect" from the United States.

Demand Side

Copper apparent consumption

According to data on domestic apparent copper consumption compiled by SunSirs, apparent copper consumption has increased year by year since 2021, although the growth rate has slowed down in the past two years. According to the data, the apparent consumption in 2025 was 17.0042 million tons, which was comparable to the total apparent consumption in 2024.

The transition between old and new growth drivers in the copper industry

The demand structure for copper was undergoing a shift from traditional to new drivers of growth. Emerging sectors such as new energy, the digital economy, and artificial intelligence were growing rapidly, and the development of these new industries was driving increased copper consumption. The share of copper used in new energy vehicles, wind and solar power installations, and data centers has jumped from 6.8% in 2021 to 19.4%, becoming a significant support for copper demand growth.

Power cables:

During the 15th Five-Year Plan period, the average annual growth rate of investment in national power grid projects is expected to exceed 5%. With the rapid progress of numerous large-scale wind and solar power bases in desert and arid regions, and the continuous increase in demand for hydropower transmission, ultra-high voltage power transmission construction is likely to maintain a high pace of development in the coming years. At the same time, intelligent upgrading and transformation of the power grid will also be continuously intensified.

According to the National Energy Administration, from January to October 2025, national power grid projects completed investments totaling 482.4 billion yuan, a year-on-year increase of 7.2%. According to the 2025 work conferences of the two major power grid companies, State Grid Corporation of China invested over 650 billion yuan for the first time this year, while China Southern Power Grid plans fixed asset investments of 175 billion RMB, setting a new historical record. Analysts predict that during the 14th Five-Year Plan period, national power grid project investments will reach approximately 2.8 trillion yuan, with an average annual investment of around 550 billion yuan.

National real estate construction starts and completions

From January to October, the sales area of newly built commercial housing was 719.82 million square meters, a year-on-year decrease of 6.8%; of which, the sales area of residential housing decreased by 7.0%. The sales value of newly built commercial housing was 6,901.7 billion RMB, a decrease of 9.6%; of which, the sales value of residential housing decreased by 9.4%. From January to October, the construction area of buildings by real estate development enterprises was 6,529.39 million square meters, a year-on-year decrease of 9.4%. Of this, the construction area of residential buildings was 4,552.53 million square meters, a decrease of 9.7%. The newly started construction area was 490.61 million square meters, a decrease of 19.8%. Of this, the newly started construction area of residential buildings was 359.52 million square meters, a decrease of 19.3%. The completed construction area was 348.61 million square meters, a decrease of 16.9%. Of this, the completed construction area of residential buildings was 248.66 million square meters, a decrease of 18.9%.

Home Appliance Industry: Regarding domestic demand, since 2025, under the influence of policy stimulus and tariff disruptions, the home appliance industry has seen a divergence between domestic and export sales. In the domestic market, the stimulating effect of the trade-in policy has gradually weakened, and replacement of existing appliances has become the mainstream. Regarding external demand, starting in April 2025, my country's home appliance exports declined year-on-year, breaking the recovery trend since 2023. Short-term pressure is concentrated, as the US imposition of tariffs on Chinese goods has increased the cost of Chinese exports to the US, and coupled with shrinking demand due to overseas inflation, this has suppressed export growth. Overall, with the phasing out of policies and the drag from the real estate sector, the home appliance industry will likely exhibit a pattern of "stable domestic sales and export support" in the future.

Automobile production

In the automotive sector, in November 2025, my country's automobile production and sales reached 3.532 million and 3.429 million units respectively, representing month-on-month increases of 5.1% and 3.2%, and year-on-year increases of 2.8% and 3.4%. From January to November, cumulative automobile production and sales reached 31.231 million and 31.127 million units respectively, representing year-on-year increases of 11.9% and 11.4%. my country's automobile production and sales have ranked first globally for 16 consecutive years. According to data from the China Association of Automobile Manufacturers, in 2024, my country's automobile production and sales reached 31.282 million and 31.436 million units respectively. Of these, new energy vehicles (NEVs) accounted for over 12 million units in both production and sales, with NEV sales accounting for 40.9% of total new car sales.

Artificial Intelligence

The rise of AI data centers is triggering a surge in copper demand. According to McKinsey statistics, the global installed capacity of data centers is projected to reach 82 GW by 2025; with the popularization of AI technology and the explosive growth in computing power demand, the process of upgrading existing data centers for AI and building new AI-dedicated data centers is accelerating.  It is estimated that by 2026, the global data center capacity will reach 102 GW, of which 62 GW will be for AI workloads and 40 GW for non-AI workloads. Based on calculations, the estimated copper consumption for data centers is expected to reach 590,000 tons in 2026 and potentially 1.4 million tons by 2030.

III. Factors Influencing 2026

Global mining and construction projects in 2025

In 2026-2027, the resumption of production at several projects will drive an increase in mine supply of 792,000 to 961,000 tons. New mines commissioned in 2026-2027 will contribute relatively little to this increase; the main increase will come from the resumption of production at mines such as Grasberg, Kakula, and Batu Hijau. In addition, the Cobre Panama mine is expected to begin negotiations in 2026 and resume production in 2027, but persistently high copper mine disruption rates may affect the recovery of mine production.

Copper supply will remain tight in 2026

Frequent disruptions at copper mines globally are hindering normal mining operations and limiting copper production growth. Since 2025, the global copper supply disruption rate has surged, with frequent mine accidents and production interruptions and suspensions leading to continuous downward revisions of annual copper production forecasts. The originally expected increase of 520,000 tons of copper did not materialize as planned; projects with significant reductions include Grasberg in Indonesia, Kamoa-Kakula in the Democratic Republic of Congo, El Teniente in Chile, and QB mine in Chile. Global copper production is expected to increase by 1.5% to 23.324 million metal tons in 2025. In 2026, the main contributing mines will be Julong Phase II, Amman in Indonesia, Antamina in Peru, Miador Phase II in Ecuador, Udokan and Malmyzh in Russia, and QB2 in Chile, with a total expected increase of approximately 500,000 tons.

In 2026, the supply and demand balance in the copper market is expected to tighten. Supply will be constrained by multiple factors, including a slowdown in the growth rate of copper ore reserves and declining ore grades, leading to a widening deficit of copper concentrate to 254,000 tons.

Copper Concentrate Processing Fees Drop to Zero

On December 19, 2025, representatives from Chinese copper smelters and Antofagasta finalized the benchmark processing fee for long-term copper concentrate contracts in 2026 at US$0/ton and US$0/pound; while the benchmark processing fee for long-term copper concentrate contracts in 2025 was US$21.25/ton and US$2.125/pound. Since 2025, there has been no large-scale production reduction at the smelting end, but declining smelting profits and raw material supply constraints in 2026 will continue to test the stability of high growth rates in the smelting sector. If the revenue from sulfuric acid by-products declines, the shortage at the mining end may be transmitted to the smelting end.

Increased demand in the new energy sector.

The new energy sector has become the core engine of copper consumption growth, exhibiting high copper intensity. Combined with industry expansion, this is continuously driving up the incremental demand for copper. From a per-unit consumption perspective, new energy vehicles (especially pure electric vehicles) use 2-3 times more copper than traditional fuel vehicles. Photovoltaic installations consume over 3,000 tons of copper per GW, onshore wind power consumes over 4,000 tons per GW, and offshore wind power reaches the 10,000-ton level per GW. In terms of industry scale, global new energy vehicle and wind power growth rates are expected to remain at a medium-to-high level of over 10% in 2026, while photovoltaic demand is expected to experience a slight year-on-year decline due to industry competition and policy impacts. It is estimated that in 2026, the three major new energy sectors will consume 5.03 million tons of copper, a year-on-year increase of 8.4%, making them the main support for copper demand growth.

AI data centers were driving a surge in copper demand

AI data centers are triggering a surge in copper demand. According to McKinsey statistics, the global installed capacity of data centers reached 82 GW by 2025; with the popularization of AI technology and the explosive growth in computing power demand, the process of AI-driven transformation of existing data centers and the construction of new AI-dedicated data centers is accelerating. It is estimated that by 2026, the global data center capacity will reach 102 GW, of which AI workload will account for 62 GW, and non-AI workload capacity will be 40 GW. Based on these calculations, it is estimated that data centers will consume 590,000 tons of copper in 2026, and this figure may reach 1.4 million tons by 2030.

Increased demand in traditional sectors

Driven by traditional consumption, global power grid investment began a rapid growth trajectory in 2023, reaching $356 billion in 2023 and $388 billion in 2024, representing year-on-year growth of 10% and 9%, respectively. In 2024, power grid investments in China, North America, and Europe were $83 billion, $114 billion, and $84 billion, respectively, together accounting for 72% of global power grid investment.

The combination of growing global electricity demand and the widespread aging of power grids in Europe and North America makes investment in power grids necessary. Steady growth in global electricity demand is driving investment in power equipment and power grids; the need to replace aging existing power grids is also a key factor. Currently, the average service life of European power grids is 50 years, and that of North American power grids is 40 years, both approaching their designed service life. The replacement of aging assets constitutes a long-term investment driver.

Goldman Sachs predicts a significant increase in Western power grid investment, with European grid investment expected to grow by 55% by 2035 and US grid investment by 24% by 2030. Total global power grid investment is projected to reach $12 trillion between 2025 and 2030. The International Energy Agency (IEA) and the International Renewable Energy Agency (IRENA) have also provided investment forecasts of $600 billion and $670 billion annually, respectively. Based on data from BNEF, IEA, and other sources, global power grid investment is expected to have a compound annual growth rate (CAGR) of 8% between 2025 and 2050. Regionally, Oceania, Africa, and Asia will contribute more to this growth, with a CAGR of 8% or higher, while the Americas and Europe will also see growth above 7%. This power grid investment will significantly boost demand for copper.

Macroeconomic policies stimulated demand

In 2026, global monetary policy is expected to undergo a clear shift.  Following the resumption of interest rate cuts by the Federal Reserve in September 2025, a sustained easing cycle is highly likely to begin. Market consensus suggests that the pace of Fed interest rate cuts will become clearer in 2026, with two gradual rate cuts expected throughout the year. The start of the Fed's easing cycle will have significant global spillover effects, potentially leading major global economies to follow suit with their own easing cycles, thus creating a comprehensively looser global liquidity environment. From a market perspective, this looser monetary environment will stimulate a recovery in market demand, while also attracting more capital into commodity markets, driving up prices.

IV. Summary and Predictions

In 2025, global copper prices are expected to show a volatile upward trend, with a significant increase in the average price level.

On the supply side, rigid constraints from multiple factors such as the slowdown in the growth rate of copper ore reserves, declining ore grades, the scarcity of large-scale new projects, and frequent disruptions at mines have resulted in a year-on-year growth rate of only 2.1% in global copper concentrate production, significantly lower than the 2.6% growth rate of primary refined copper production. The copper concentrate deficit is expected to widen to 254,000 tons.

On the demand side, the high growth in emerging fields such as new energy and artificial intelligence, coupled with increased investment in global power grids, has created a combined force that drove global refined copper consumption to increase by 2.6% year-on-year to 28.65 million tons. The supply-demand balance shifted from a slight surplus in 2025 to a tight balance, with an estimated deficit of approximately 10,000 tons for the year.

Coupled with the macroeconomic benefits of global liquidity easing brought about by the Federal Reserve's interest rate cuts and a weaker U.S. dollar index, as well as the market characteristics of structural imbalances in global inventories amplifying price elasticity, copper prices have ample upward momentum. It is expected that the average annual price of copper will continue to rise in 2026.

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