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Copper Prices Surge
On January 12, Shanghai copper futures regained their upward momentum. The main contract, 2602, opened at 101,910 yuan per ton, climbed to a high of 103,970 yuan during the session, dipped to a low of 101,520 yuan, and finally settled at 103,800 yuan at 15:00, marking a substantial increase of 3,520 yuan or 3.51%. Despite a decrease in daily trading volume by 94,076 lots to 209,742 lots and a reduction in open interest by 5,985 lots to 182,688 lots compared to the previous trading day, the upward trend in copper prices remained unshaken.
During the Asian trading session, London Metal Exchange (LME) copper prices also advanced strongly. As of 16:12 Beijing time, the latest quote stood at $13,171.5 per ton, rising by $206 or 1.59%, with an intraday high touching $13,227 per ton.
This rally, driven by a confluence of macro policies, geopolitical conflicts, and industrial transformation, is reshaping the global copper supply chain at an unexpectedly rapid pace.
Macro Drivers: The Dual Impact of Policy and Geopolitics
(I) U.S. Employment Data: A Mixed Bag Casting Doubt on Fed Policy
Data released by the U.S. Labor Department showed that seasonally adjusted non-farm payrolls increased by 50,000 in December, falling short of the market estimate of 60,000. The November figure was also revised downward to an increase of 56,000 from the previously reported 64,000. However, the unemployment rate dropped to 4.4% in December, below the market estimate of 4.5% and the previous month’s 4.6%. Regarding wages, the month-on-month growth rebounded to 0.3% (from 0.2% previously), while the year-on-year increase accelerated significantly to 3.8%, the highest level since September 2025.
The lower-than-expected non-farm payrolls, coupled with a declining unemployment rate and rebounding wages, painted a mixed picture of the U.S. job market. The market currently maintains the view that the Federal Reserve will hold rates steady in January, but uncertainty persists regarding the future trajectory of monetary policy. The weakening U.S. dollar index has served as a catalyst for rising commodity prices, making dollar-denominated copper more attractive to buyers holding other currencies and thereby boosting copper prices.
(II) Fed Independence Under Scrutiny: Mounting Market Concerns
On January 11 local time, Federal Reserve Chair Jerome Powell stated that the U.S. Department of Justice had served a subpoena on the Fed and threatened criminal charges over his testimony concerning the renovation of the Fed building. Powell called this action a “pretext,” suggesting the administration aimed to exert more pressure on him regarding interest rate cuts. This news heightened market concerns over the Federal Reserve’s independence and the credibility of the U.S. dollar, further intensifying market volatility and providing macro-level support for the rise in copper prices.
(III) Domestic Policy: Stimulus Package to Boost Domestic Demand
On January 9, Premier Li Qiang presided over an executive meeting of the State Council, emphasizing that implementing a coordinated fiscal and financial policy package to stimulate domestic demand is a crucial measure for expanding effective demand and innovating macroeconomic regulation. The meeting highlighted the need to strengthen coordination between fiscal and financial policies and guide social capital participation in boosting consumption and investment. This policy direction is expected to stimulate domestic economic growth, increase demand for industrial metals like copper, and provide domestic policy support for rising copper prices.
(IV) Geopolitical Conflicts: Rising Concerns Over Resource Stability
As geopolitical tensions escalate globally, concerns over resource supply stability are growing. Today’s strong performance in precious metals significantly influenced the non-ferrous metals sector, with lithium carbonate and Shanghai tin hitting their upper price limits, also boosting Shanghai copper. The uncertainty stemming from geopolitical risks drives investors towards safe-haven assets. As a critical industrial metal and strategic resource, copper prices find support from these geopolitical factors.
Industry Dynamics: Intensified Supply-Demand Dynamics
(I) Supply Side: Persistent Tightness in Mine Supply Pressures Processing Fees
Recently, spot treatment charges for copper concentrate in China have remained under pressure, indicating a continued tight supply of ore. Chile’s state-owned mining company Codelco reported a decline in production, with its November copper output falling by 3% year-on-year to 130,900 metric tons. Production at the world’s largest copper mine, Escondida, owned by BHP, dropped by 12.8% to 94,400 metric tons. Furthermore, informed sources revealed that last month, Chilean mining company Antofagasta and a Chinese copper smelter reached an agreement to reduce copper treatment and refining charges for 2026 to zero. For 2025, spot treatment charges even turned negative, meaning smelters have to pay miners for processing copper concentrate.
Tightness in mine supply is highly likely to push copper prices higher. Although domestic supplies continue to arrive and inventories are accumulating, any minor disturbance in the mining sector can trigger sensitive market reactions, serving as a significant supporting factor for rising copper prices.
(II) Demand Side: Short-term Boost and Long-term Constraints Coexist
China’s Ministry of Finance announced the cancellation of value-added tax export rebates for products like photovoltaic modules starting April 1, 2026. This policy may prompt the photovoltaic industry to rush production in the short term, leading to a temporary boost in sector consumption and providing short-term support for copper prices. However, the consumption sector has entered its seasonal low season, with year-end sentiment growing. Downstream users have low acceptance of current high prices, resulting in significantly suppressed restocking demand. Spot market transactions remain sluggish, putting continuous pressure on premiums.
Nevertheless, the complete cancellation of export rebates for China’s photovoltaic products, coupled with expectations of front-loaded exports, may stimulate short-term demand for metals. Since the beginning of the year, intensifying global geopolitical conflicts have sustained market concerns over resource stability, also providing some demand-side support for copper prices.
(III) Corporate Moves: Strategic Adjustments and Market Dynamics
Pan Pacific Copper (PPC), Japan’s largest refined copper supplier, informed sources last Friday that the premium it proposed to domestic Japanese customers for 2026 copper reached a record high of $330 per ton last month. This physical delivery premium, added to the London Metal Exchange (LME) benchmark copper price, is more than triple the $88 premium for 2025. The surge in premiums reflects the sharp decline in treatment and refining charges (TC/RCs), which raises raw material procurement costs, prompting the company to pass the burden onto customers.
Additionally, market attention is focused on Rio Tinto Group’s negotiations to acquire Glencore. A successful bid would create the world’s largest mining company with a combined market value of nearly $207 billion. Strategic adjustments and merger & acquisition activities among companies will impact the supply landscape and price trends in the copper market, making them focal points for market participants.
Spot Market: Soaring Prices and Fluctuating Premiums
Statistics from the Changjiang Nonferrous Metals Network show that domestic spot copper prices surged across the board today. The Changjiang Spot 1# copper price was quoted at 103,280 yuan per ton, up by 2,600 yuan, with premiums ranging from 90 to 130 yuan, an increase of 30 yuan from yesterday. The Changjiang Composite 1# copper price was quoted at 103,205 yuan per ton, up by 2,580 yuan, with discounts of 20 yuan to premiums of 90 yuan, an increase of 35 yuan. The Guangdong Spot 1# copper price was quoted at 103,160 yuan per ton, up by 2,560 yuan, with discounts ranging from 110 yuan to premiums of 90 yuan. Although the discount range changed, overall prices remained firm. The Shanghai 1# copper price was quoted at 103,170 yuan per ton, up by 2,580 yuan, with discounts of 40 yuan to premiums of 40 yuan, an increase of 10 yuan.
The sharp rise in spot prices reflects strong market demand for copper. Although consumption is in a seasonal low season with growing year-end sentiment, downstream acceptance of current high prices remains low, significantly suppressing restocking demand and leading to sluggish spot market transactions and continued pressure on premiums. However, favorable factors at the macro and industry levels continue to support the upward trend in copper prices.
Technical Analysis and Outlook: Bullish Momentum with Cautious Optimism
From a technical perspective, copper prices are expected to maintain a strong upward trend in the short term. The interplay of multiple factors provides strong momentum for rising copper prices, but some uncertainties remain.
On one hand, uncertainties in macro policies, escalating geopolitical risks, and tight supply conditions support higher copper prices. On the other hand, the seasonal low in consumption, downstream resistance to high prices, and inventory accumulation exert some restraining pressure on the price increase.
In summary, the copper industry is navigating a complex and volatile environment, with price trends influenced by a combination of macro policies, geopolitics, and industry supply-demand dynamics. Investors and industry participants should closely monitor market developments, grasp macro policy directions, pay attention to changes in industry supply and demand, and view the future trajectory of copper prices with cautious optimism, seeking investment opportunities and formulating response strategies amidst market fluctuations.
Disclaimer: This article is based on publicly available information and does not constitute investment advice. Changjiang Nonferrous Metals Network
Reprinted from https://www.ccmn.cn/
