GOLDEN SUN SECURITIES·2025-11-30 06:37Investment Rating - The report maintains an "Overweight" rating for the copper sector, indicating a positive outlook for investment opportunities in this industry [5]. Core Insights - The report highlights that the copper market is expected to experience a supply shortage in 2026 due to ongoing disruptions in mining operations and insufficient capital expenditure (CAPEX) [1][2][3]. - It emphasizes that macroeconomic factors, particularly the interplay between U.S. and China policies, will support a bullish trend in copper prices, with expectations of a price increase driven by demand from sectors like electric grids, new energy vehicles, and AI [3][4][8]. Summary by Sections 1. Review of 2025 - The copper market faced unexpected supply disruptions in 2025, leading to a confirmed shortage for 2026. Major incidents included mining disruptions at Kamoa-Kakula, El Teniente, Grasberg, and Quebrada Blanca, collectively reducing production guidance by 490,000 tons [1][13][19]. 2. Outlook for 2026 2.1 Macroeconomic Factors - 2026 is a pivotal year for U.S.-China relations, with expectations of a more stable trade environment and supportive fiscal policies, which are likely to enhance copper price stability and growth [3][23]. 2.2 Supply Side - The report notes that supply constraints will persist in 2026, with CAPEX needing to rise to incentivize new projects. Current CAPEX levels are significantly lower than historical peaks, indicating a cautious approach from mining companies [3][36][37]. 2.3 Demand Side - Demand for copper is projected to grow, particularly from electric grid investments and the burgeoning AI sector. The report estimates a compound annual growth rate (CAGR) of 3.7% for copper demand from 2025 to 2029 [4][8]. 3. Supply-Demand Gap from 2025 to 2029 - The report forecasts a widening supply-demand gap for copper, with expected shortages of 470,000 tons in 2025, increasing to 244,000 tons by 2029 if production does not ramp up significantly [4][41]. 4. Key Investment Recommendations - The report suggests focusing on companies such as Zijin Mining, Luoyang Molybdenum, and others, which are expected to benefit from the anticipated price increases and improved earnings [8][9].