In January and February 2025, copper prices both domestically and internationally have shown signs of strengthening. This trend is driven by two key factors: expectations of copper supply shortages and a recovery in copper demand, both domestically and abroad.
Reflecting on the surge in copper prices from February to May 2024, it was primarily fueled by market optimism about increased copper consumption due to advancements in artificial intelligence (AI). However, weaker-than-expected domestic copper consumption subsequently limited the price rally.
Looking ahead, we anticipate a renewed upward trend in copper prices. The primary drivers include a tightening copper supply worldwide, which has led to negative spot market treatment and refining charges (TC/RC) for copper concentrates. Additionally, a stabilized real estate market and wider adoption of AI technologies are expected to stimulate a recovery in China’s copper demand. Over the long term, demand drivers such as renewable energy expansion, large-scale AI applications, and post-conflict reconstruction efforts suggest a growing risk of copper shortages.
Tightening Copper Supply
At the end of 2024, the China Smelters Purchase Team (CSPT) set the guidance TC/RC for spot copper concentrate purchases in Q1 2025 at $25 per ton and 2.5 cents per pound, a significant 68.8% decline compared to $80 per ton and 8 cents per pound in Q1 2024. By January 2025, the spot TC/RC for imported copper concentrate had fallen into negative territory, reaching -$8.6 per ton and -0.86 cents per pound as of February 24, signaling an intensification in copper supply constraints.
Figure 1: Spot TC/RC for Imported Copper Concentrate
The drastic drop in TC/RC rates is attributed to decelerating copper mine output growth, while refined copper production capacity continues to expand. Based on data from major copper mining companies, the combined output of the top 16 producers reached approximately 13.54 million tons in 2024, implying a global copper mine output of around 22.75 million tons—an annual growth rate of just 1.6%. This figure falls significantly short of the annual 5%+ growth rate seen during the 2013-2017 mining expansion cycle.
In 2025, global copper mine output is expected to register modest growth. Key contributors include capacity expansions in the Democratic Republic of Congo (e.g., Kamoa-Kakula), Mongolia (e.g., Oyu Tolgoi underground mine), and the launch of Russia’s Malmyzhskoye mine.
The International Copper Study Group (ICSG) estimates that global refined copper production reached 27.6 million tons in 2024, representing a year-on-year growth of 4.1%—a slowdown compared to the 4.8% growth in 2023. In 2025, we expect this growth rate to decelerate further. For example, under a long-term TC benchmark of $21.25 per ton, copper smelters are expected to incur losses exceeding 1,000 yuan per ton.
Recovery in Copper Demand
Global refined copper consumption in 2024 is estimated at approximately 27.2 million tons, reflecting a marginal 0.2% year-on-year increase. This muted growth is primarily attributed to a marked slowdown in Chinese copper demand, particularly due to contractions in copper use within the real estate sector, alongside slower growth in copper consumption for electric vehicles.
Nevertheless, copper use for power generation rebounded, supported by the expansion of renewable energy installations such as solar and wind power. According to data released by China’s National Energy Administration, as of December 2024, the country’s total installed power generation capacity was approximately 3.35 billion kilowatts, up 14.6% year-on-year. Of this, solar power capacity reached 890 million kilowatts (up 45.2%), and wind power capacity hit 520 million kilowatts (up 18%).
Globally, it is estimated that 2025 will see an additional 450,000 tons of copper demand from renewable energy applications, with solar, wind, and automotive sectors contributing 127,000 tons, 75,000 tons, and 246,000 tons, respectively.
Conclusion
From a macroeconomic perspective, factors such as the risk of re-inflation triggered by U.S. tariff policies or an unexpected downturn in the U.S. economy are likely to enhance copper’s appeal as an investment asset. Re-inflation could drive demand for copper as a hedge against inflation, while an economic slowdown might prompt the Federal Reserve to resume rate cuts, further stimulating investment demand.
From a supply-demand standpoint, constrained copper mine output will limit refined copper production, while demand recovery driven by large-scale AI adoption, post-conflict reconstruction, and other factors will strengthen the market.
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