Table of Contents

Introduction

Since October 2023, copper prices have continued to rise, approaching US$9,400/ton. It’s expected to exceed US$10,000 by the end of the year. Reasons for the rise in copper prices include supply contraction, demand expansion and the impact of monetary policy. The imbalance between supply and demand is the leading factor in the future trend of copper prices.

Copper price trend since Aug 2023

copper price

Data from: https://markets.businessinsider.com/commodities/copper-price

Brass price trend since Oct 2023：

brass fittings price

Analyze the reasons

We will analyze the reasons for the "wild surge" in copper prices from three aspects:

1. From the supply side

Copper resources are mainly concentrated in countries such as Chile, Peru, Congo (DRC), Australia, Mexico and the United States. Chile is the country with the richest copper resources in the world. However, judging from the current supply situation of major copper mines around the world, the growth of global copper mine production is lower than expected.

Factors such as declining grades, rising costs, and environmental protection policies have led to reductions in the output of major mines. For example, Panama's largest copper mine was closed by the government, and Chile's copper mines were unable to produce due to climate reasons.

Not long ago, China also held a meeting to discuss possible measures including production cuts. The global copper concentrate market has tightened, processing fees have dropped to almost zero levels, and expectations of "production cuts by Chinese copper smelters" have further ignited market sentiment.

2. From the demand side

1. Economic recovery

From the economic data from around the world to China, we can see that the global economy is in the recovery stage. In March, China's manufacturing PMI data was 50.8%, significantly exceeding expectations. The rebound in manufacturing is expected to drive increased demand for industrial metals.

2. New needs

Generally speaking, the demand for copper mainly comes from electricity and power equipment, and the development of AI technology has led to an increase in demand for copper; AI data centers have become a new growth point for copper demand.

3. China’s demand

China occupies an important position in global copper consumption, and copper consumption is closely related to low-carbon transformation. The power industry is the main area of copper consumption, and the construction of new energy vehicles and new power systems based on new energy will also promote the growth of copper demand. In addition, China's promotion of large-scale equipment updates and trade-in of consumer goods is expected to further stimulate copper demand.

Supply and demand balance sheet

10k Ton	2020A	2021A	2022A	2023E	2024E	2025E
Global copper concentrate production	2068	2110	2194.1	2260	2299	2329
Yoy(%)		2.0%	4.0%	3.0%	1.7%	1.3%
Global refined copper production	2458.9	2480.1	2567.3	2652.8	2698.6	2733.8
Yoy(%)		9.0%	3.5%	3.3%	1.7%	1.3%
Primary refined copper production	2074.6	2065.2	2146.2	2210.7	2248.8	2278.2
Recycled refined copper production	384.3	414.9	421.1	442.1	449.8	455.6
Global refined copper consumption	2497.5	2525.6	2600.0	2650.0	2716.3	2800.0
Growth rate (%)		1.1%	2.9%	1.9%	2.5%	3.1%
Supply and demand gap	-38.6	-45.5	-32.8	2.8	-17.7	-66.2

Data from iFinD, ICSG, Mvsteel, Announcements from various companies, China Post Securities Research Institute

The above table is a calculation table of copper supply and demand by research institutions in 2024 and 2025. The data shows that the supply gap in 2024 is 177,000 tons, and the gap will further expand to 662,000 tons in 2025. On the whole, copper is currently in a stage of shrinking supply and expanding demand, and the rise in copper prices is supported by relatively clear fundamentals.

3. Monetary policy

copper brass usd

Previously, the market's consensus expectation was that the Federal Reserve would cut interest rates three times this year, and investors began to trade in anticipation of interest rate cuts in advance. Benefiting from this, the prices of commodities, such as gold and copper, priced in US dollars, continued to rise.

The relationship between supply and demand will dominate the future market.

Interestingly, expectations for a rate cut by the Fed took a hit during the holidays. The performance of U.S. non-farm data and the statements of Federal Reserve officials have increased the possibility that the Federal Reserve will not cut interest rates this year, or even raise interest rates. However, commodity futures prices such as gold and copper have not been greatly affected. It seems that the future trend of copper prices and the imbalance between supply and demand are the real leading themes.

Conclusion

The price for copper and brass still keeping increasing, and won’t come down in short time. So if you have any order plan for the copper fittings or brass fittings, please contact Vpexco as quickly as you can. The earlier you order, the more money you can save! The earlier you order, the faster you grap the market than your competitors!