CITIC SEC released a research report stating that amid major disruptions in existing projects and bottlenecks in new projects, Q3 global copper production from major miners fell nearly 5% year-on-year, with Q4 expected to continue contracting. Raw material shortages and potential "anti-involution" policies may further tighten China's refined copper supply in Q4. Coupled with steady demand, domestic inventories are likely to decline moderately. Meanwhile, sluggish supply and resilient demand next year could widen the global refined copper deficit by 50%, allowing LME copper prices to fully demonstrate upward momentum above $10,000/ton. The firm recommends positioning in copper-related equities.
Key takeaways from CITIC SEC: 1. **Global Copper Supply Contraction**: - Q1-Q3 output from major producers dipped 0.1% YoY (Q3: -4.7%). Full-year 2025 production is now forecast to drop 1.0% (vs. prior +0.6% estimate), with Q4 likely down ~5%. Risks remain for companies like Glencore to miss targets. - 2026 production growth may plunge to +1.8% from an earlier +3.9% projection. - Global mine output is stagnating, with 2025/2026 estimates revised to -0.3%/+0.2% (from +0.3%/+2.7%) due to operational setbacks (e.g., PT-FI mine accident cutting output by 200-300kt) and project delays (e.g., Teck’s QB2 tailings issue reducing guidance by ~100kt).
2. **Chinese Miners’ Rising Influence**: - Zijin Mining, CMOC, and MMG ranked as the world’s 4th, 7th, and 12th largest copper producers in Q1-Q3 2025, achieving >75% of annual targets—outpacing global peers. - Three China-backed mines (TFM, Kamoa-Kakula, Las Bambas) now rank among the top five globally. Projects like Julong, Mirador, and Kamoa-Kakula are expected to add >100kt each in the next two years.
3. **Price Outlook**: - **Short-term (Q4 2025)**: China’s refined copper supply may shrink due to feedstock shortages, pushing inventory-to-consumption days below the 5-year average (<10 days). LME copper could trade at $10,000-$12,000/ton. - **2026**: Robust demand from China’s grid investments (historically +10% YoY in new 5-year plan cycles) and global AI expansion (~200kt demand boost) may widen the deficit to 300kt (vs. 2025’s 210kt deficit and 2024’s 280kt surplus). LME prices could average $11,000/ton (up from $9,700 in 2025).
**Risks**: Faster-than-expected supply growth; weaker U.S./China economies; seasonal demand misses; delayed Fed rate cuts; overseas price volatility; operational risks for foreign assets.