Core Viewpoint - The copper market is experiencing weakness due to sluggish domestic demand and increasing social inventory, leading to a decline in copper prices [1] Group 1: Market Performance - On Friday night, copper prices showed a significant decline, closing down by 0.68% after a slight recovery in the morning [1] - The overall atmosphere in the non-ferrous sector has turned weak, with domestic copper demand remaining low [1] Group 2: Inventory and Supply - As of January 19, domestic electrolytic copper inventory reached 338,000 tons, an increase of 10,500 tons compared to January 15 [1] - The recent increase in domestic supply and high copper prices have limited purchasing demand from downstream enterprises, contributing to the rise in inventory [1] Group 3: Processing Fees and Production - Domestic copper concentrate processing fees continue to operate weakly, although trading enthusiasm has shown some recovery [1] - A survey indicated that five domestic smelting plants will undergo maintenance in January, leading to expectations of a decline in refined copper production [1] Group 4: Future Outlook - Jinrui Futures suggests that while the market has cooled due to the postponement of tariffs, the impact on copper may be minimal, and the price spread has not shown significant changes [1] - The anticipated tightness in the copper market is expected to persist, indicating that the overall strong fluctuation in copper prices may not be over yet [1]

Core Viewpoint - Jiangxi Copper Co., Ltd. (00358) experienced a decline of over 3%, closing at HKD 46.04 with a trading volume of HKD 893 million, following a report that Nvidia revised its data center copper demand figures significantly downward [1] Group 1: Market Impact - Nvidia adjusted its technical paper, reducing the copper busbar usage per gigawatt rack from "500,000 tons" to 200 tons, leading to potential downward revisions in future copper demand expectations [1] - Analysts from Goldman Sachs warned that much of the copper price increase may have already occurred, indicating that future price corrections are becoming more likely [1] Group 2: Supply and Demand Dynamics - Copper Crown Jin Yuan Futures noted that easing tariffs and the market's pricing in of two interest rate cuts this year have led to profit-taking by some overseas funds [1] - Nvidia's earnings report raised suspicions about the overestimation of copper usage in AI data centers, while a rebound in the US dollar index is constraining upward movement in metal prices [1] - On the supply side, ongoing disruptions in overseas mines and a marginal contraction in domestic refined copper supply have been observed, with global visible inventories surpassing 1 million tons and domestic social inventories continuing to increase [1] - Short-term copper prices are expected to remain in a high-level range of fluctuations [1]

Core Viewpoint - The article emphasizes that the copper market is expected to remain tight in 2026, supporting a potential increase in copper prices despite current pressures on demand [4]. Supply and Demand - As of January 16, 2026, SHFE copper closed at 100,770 CNY/ton, down 0.63% from January 9, while LME copper closed at 12,803 USD/ton, down 1.50% [4]. - The TC spot price has reached a historical low, indicating tight procurement conditions for copper concentrate [4][6]. - Domestic copper social inventory increased by 17.2% week-on-week, while LME copper inventory rose by 4.6% [5]. Inventory Levels - Domestic mainstream port copper concentrate inventory stood at 690,000 tons, up 7.8% week-on-week as of January 16, 2026 [5]. - Global electrolytic copper inventory totaled 900,000 tons, reflecting a week-on-week increase of 7.7% [5]. Supply Factors - In October 2025, China's copper concentrate production was 130,000 tons, down 8.1% month-on-month and 12.1% year-on-year [6]. - The price difference between refined copper and scrap copper was 3,391 CNY/ton, down 1,010 CNY/ton from January 9 [6]. Smelting and Processing - The TC spot price was recorded at -46.6 USD/ton, marking a historical low [7]. - In December 2025, China's electrolytic copper production was 1,178,100 tons, up 6.8% month-on-month and 7.5% year-on-year [7]. Demand Insights - Cable manufacturing, which accounts for approximately 31% of domestic copper demand, saw a weekly operating rate of 55.99%, down 0.59 percentage points [8]. - Air conditioning production, representing about 13% of domestic copper demand, is projected to decline by 11.4% and 2.4% in the first quarter of 2026 [8]. Futures Market - As of January 16, 2026, the SHFE copper active contract open interest increased by 24% week-on-week, reaching 226,000 lots [9]. - COMEX non-commercial net long positions were recorded at 53,000 lots, down 7.6% week-on-week [9].

Investment Rating - The report maintains an "Accumulate" rating for the copper industry [6] Core Viewpoints - The copper market is expected to remain tight in 2026, supporting upward price movement. As of January 16, 2026, SHFE copper closed at 100,770 CNY/ton, down 0.63% from January 9, while LME copper closed at 12,803 USD/ton, down 1.50% [1] - The report highlights that the market has largely priced in the Federal Reserve's decision not to cut interest rates in January 2026 [1] - The report anticipates that supply constraints and improving demand will lead to further increases in copper prices [4] Summary by Sections Inventory - Domestic copper social inventory increased by 17.2% week-on-week, while LME copper inventory rose by 4.6% [2] - As of January 16, 2026, global inventory across the three major exchanges reached 900,000 tons, up 7.7% from January 9 [2] Supply - The TC spot price reached a historical low of -46.6 USD/ton [3] - Domestic copper concentrate production in October 2025 was 130,000 tons, down 8.1% month-on-month and 12.1% year-on-year [2] - The price difference between refined copper and scrap copper decreased by 1,010 CNY/ton, indicating tighter scrap supply [2][55] Demand - The cable manufacturing industry's operating rate decreased by 0.6 percentage points to 55.99% [3] - The report notes that cable production accounts for approximately 31% of domestic copper demand [3] - Air conditioning production is projected to see a year-on-year increase of 11% in January 2026, followed by declines of 11.4% and 2.4% in February and March, respectively [3][95] Futures - SHFE copper active contract positions increased by 24% week-on-week, with a total of 226,000 contracts as of January 16, 2026 [4] - COMEX non-commercial net long positions decreased by 7.6% week-on-week [4] Investment Recommendations - The report recommends investing in Zijin Mining, Western Mining, Luoyang Molybdenum, and Jincheng Mining, while keeping an eye on Tongling Nonferrous Metals [4]

Report Summary 1) Report Industry Investment Rating - The investment rating for the copper sector in the non - ferrous metals industry is "oscillating with a downward bias" [1] 2) Core View of the Report - The core factor driving the copper price to break through the historical high is the concern about the US imposing tariffs on refined copper in the future, which leads to the concentration of global copper liquidity in the US. At the beginning of 2026, the non - commercial long and net long positions of COMEX copper, as well as the long and net long positions of LME copper investment funds, all continued to rise. The criminal investigation of Fed Chairman Powell and the Trump administration's threat to the Fed are expected to put pressure on the Fed regarding interest rate cuts, which is beneficial to metals with strong financial attributes such as gold, silver, copper, platinum, and palladium [1] 3) Summary by Relevant Catalogs Market Review - The night - session closing price of the main copper contract CU2603 was 102,860 yuan/ton, a 0.7% decline from the previous night - session closing price. The second - main contract CU2604 closed at 103,080 yuan/ton, with a decline of 0.74%. As of 06:00 on January 16, 2026, the closing price of the COMEX copper main contract HGH26E was 5.9915 US dollars per pound (equivalent to 92,063 yuan/ton at an exchange rate of 6.9698), a 1.7% decline from the previous trading day. The LME copper main contract CA03 closed at 13,148.5 US dollars per ton (equivalent to 91,642 yuan/ton at an exchange rate of 6.9698), a 0.3% decline [1] Important Information - On January 15, Codelco announced that its Ministro Hales copper mine had obtained environmental approval, with its operating life extended to 2054 and annual production capacity increased from 170,000 tons to 200,000 tons [1] - On January 15, Goldman Sachs raised its 2026 LME copper price forecast from 11,400 US dollars per ton to 12,200 US dollars per ton [1] - On January 11, China Non - Ferrous Metal Mining (1258.HK) released a production guidance, expecting a total copper production of about 484,000 tons in 2026, including about 134,000 tons of cathode copper and about 350,000 tons of blister copper/anode copper. The main and auxiliary shafts of the southeast ore body of Zhongse Feikuang Qianbi were repaired in December 2025, and the mine resumed production on January 1, 2026 [1] - On January 13, Codelco's chairman said that the company's copper production in 2026 was expected to reach 1.344 million tons, an increase of about 10,000 tons compared to 2025 [1] Market Logic - The fear of US tariffs on refined copper led to the concentration of global copper liquidity in the US, causing the LME copper inventory in Europe to decline from nearly 70,000 tons to less than 15,000 tons since April, and the COMEX copper inventory to rise from less than 100,000 short tons to over 500,000 tons. The criminal investigation of Fed Chairman Powell and the Trump administration's threat to the Fed are expected to put pressure on interest rate cuts, which is beneficial to metals with strong financial attributes [1] Trading Strategy - There is no trading strategy provided at present [1]

Group 1 - The overall trend of copper prices is strong, with the main contract on the Shanghai Futures Exchange breaking through 105,500 yuan/ton [1] - The relationship between supply and demand ultimately determines commodity prices, with copper market inventory changes reflecting the balance between consumption and replenishment [1] - The marginal signals from supply and demand are more easily captured by the market when macroeconomic conditions support copper prices, leading to increased price elasticity [1] Group 2 - Historical data shows a stable correlation between LME copper inventory and price trends, with inventory changes providing significant guidance for assessing global supply and demand balance [2] - During periods of inventory accumulation, prices tend to be under pressure, while during inventory depletion, prices usually receive support [2] - In specific phases, macroeconomic factors may have a more dominant impact on prices than inventory levels, as seen during the European debt crisis [2] Group 3 - The structure of warehouse receipts, particularly the proportion of canceled warehouse receipts, is a crucial indicator for assessing inventory trends [3] - A decrease in the proportion of canceled warehouse receipts typically indicates a slowdown in inventory depletion, with historical patterns suggesting a higher probability of inventory turning points when this ratio falls to around 15% or lower [3] - Current copper price trends show similarities to early 2006, with increasing U.S. copper inventory and tighter inventory in non-U.S. regions indicating regional disparities [3] Group 4 - If low inventory levels persist and macroeconomic factors continue to provide support, copper prices have a solid basis for upward movement [4] - The negative correlation between copper inventory and prices remains stable, with current macroeconomic conditions being generally positive and market risk appetite recovering [4] - Attention should be paid to potential disruptions in prices due to changes in the macroeconomic environment, weakening demand, and fluctuations in inventory structure [4]

Core Viewpoint - The logic supporting copper price increases has not significantly changed, and after the adjustment, there is potential for a rebound. The first quarter is typically a low season, and without new drivers, prices may fluctuate before the Spring Festival. Post-holiday, with resumption of work and tight spot supply, copper prices may rise again. The short-term price range is expected to be Hu copper [94,000, 120,000] CNY/ton and LME copper [12,000, 15,000] USD/ton. The strategy suggests a focus on buying on dips [2][12]. Focus Point 1: Convergence of US-LME Price Spread - Recently, the US-LME price spread has converged, primarily due to delays or cancellations of US copper tariffs, influenced by the postponement of timber tariff increases. The market anticipates potential exemptions for silver tariffs, which may similarly affect copper tariffs. Additionally, US copper imports are concentrated at the end of December, with COMEX inventories reaching 500,000 tons. Future tariff expectations may still fluctuate [5]. Focus Point 2: Continuous Supply Disruptions - Supply disruptions at the mining level continue to be frequent, exacerbating expectations of tight raw material supply. The global copper concentrate production is projected to increase from 1,888 million tons in 2023 to 1,957 million tons by 2026, with a growth rate of 2.3%. However, the balance of supply and demand indicates a deficit of 2.3 million tons in 2023, which is expected to widen to 154.5 million tons by 2025 [6][8][10]. Focus Point 3: High Prices Significantly Suppress Downstream Consumption - High copper prices have led to a notable decline in downstream consumption, with the operating rate of refined copper rods dropping from an average of 64% in December to 48%. Social inventories accumulated nearly 80,000 tons in December, with an additional 54,000 tons in January. The weak performance in consumption limits the upward momentum of prices, indicating that downstream sectors need time to adjust to the current price levels [10][13].

Summary of Conference Call on Copper Market Industry Overview - The conference call focused on the copper market, discussing supply-demand dynamics, price forecasts, and key companies in the industry [1][2][3]. Key Points and Arguments Market Conditions - Despite reduced expectations for Federal Reserve interest rate cuts, copper prices have not been significantly affected, with global refined copper supply remaining tight [1][2]. - There has been an unexpected accumulation of copper inventories in China since December 2025, although downstream orders remain stable [2][3]. - The increase in refined copper imports to the U.S. has led to a convergence of the CL price spread, influenced by tariff expectations [1][2]. Price Forecasts - The expected price range for copper in 2026 is between 94,000 to 120,000 RMB/ton for Shanghai copper and 12,000 to 15,000 USD/ton for LME copper [1][4]. - The first quarter typically shows weaker performance, but prices may strengthen post-Chinese New Year due to seasonal demand [4]. Supply and Demand Dynamics - Global copper concentrate production is expected to increase by approximately 600,000 tons in 2026, but actual increases may only be around 400,000 tons due to supply disruptions [3][12]. - The global smelting capacity is projected to grow at 2.3%, with an anticipated shortage of about 1.5 million tons in 2026 [3][12]. - High copper prices have suppressed downstream consumption, with the operating rate of refined copper rods dropping to a six-year low [14]. Key Companies to Watch - Recommended companies include Zijin Mining, Luoyang Molybdenum, Jiangxi Copper, and Zangge Mining, along with smaller firms like Western Mining and Hebei Steel Resources [1][5]. Inventory and Import Trends - As of December 2022, U.S. COMEX copper inventories were over 500,000 tons, with weekly imports around 20,000 tons [8]. - The high inventory levels are expected to continue, despite a potential decrease in import volumes in the coming weeks [8]. Impact of Strikes and Delays - The Mantoverde copper mine in Chile experienced a strike with limited impact, while the Mirador copper mine in Ecuador has delayed its second phase, which could significantly affect global supply if not resolved [9][10][11]. Long-term Demand and Supply Outlook - Long-term demand growth is expected to be around 4%, driven by emerging sectors like data centers and AI, despite short-term fluctuations [22]. - The domestic market in China is projected to see a surplus of about 300,000 tons in 2026, influenced by production increases and export adjustments [20]. Waste Copper Market - The waste copper market is expected to remain strong, with a significant increase in supply due to higher recycling rates and imports [23][24]. - Policy changes regarding waste copper could significantly impact supply dynamics [25]. Market Positioning and Strategy - Current high inventory levels suggest potential for increased price volatility, advising caution in trading strategies [26]. - High prices are exerting pressure on downstream industries, leading to reduced procurement and lower operating rates [27]. Seasonal Demand Expectations - Post-Chinese New Year demand is contingent on price stability; if prices remain manageable, a recovery in demand is anticipated [28][29].

Group 1: Investment Rating - No information about the industry investment rating is provided in the report. Group 2: Core Viewpoints - The macro - environment supports the upward movement of copper prices. The US inflation data in December 2026 increased the market's expectation of an interest rate cut in April. The supply side has issues such as unprofitable long - term contracts for smelters and potential production decline in January. The demand side has strong terminal demand but a cautious copper products sector, and there is a large inventory build - up. Concerns about US tariffs and inventory hoarding support the copper price [1]. Group 3: Summary by Directory 1. Market Analysis - The Shanghai copper futures opened higher and rose during the day. The US December inflation data showed that overall CPI was up 2.7% year - on - year, core CPI was up 2.6% year - on - year, both were flat with November and lower than market expectations. After seasonal adjustment, CPI was up 0.3% month - on - month as expected, and core CPI was up 0.2% month - on - month, lower than expected. In 2026, copper smelters can't profit from long - term contracts, and the spot market is weakly stable. By - products like sulfuric acid and gold are the main profit points. The refined - scrap copper price difference is still abnormal, but weak downstream demand restricts scrap copper trading. Five smelters plan to stop production in January, and one new smelter's start - up is postponed. Mining giants Rio Tinto and Glencore restarted merger negotiations, and if the deal is completed, they may control 15% of the global copper supply. Terminal demand is growing strongly, but the copper products sector is cautious, and there is a large inventory build - up. The market is worried about the US proposing refined copper tariffs, which supports copper prices [1]. 2. Futures and Spot Market Conditions - Futures: Shanghai copper opened higher and rose during the day. Spot: The spot premium in East China is 150 yuan/ton, and in South China is 30 yuan/ton. On January 13, 2026, the LME official price was 13310 US dollars/ton, and the spot premium was +75 US dollars/ton [3]. 3. Supply Side - As of January 12, the spot rough smelting fee (TC) was - 45.1 US dollars/dry ton, and the spot refining fee (RC) was - 4.6 US cents/pound [5]. 4. Fundamental Tracking - Inventory - SHFE copper inventory is 149,300 tons, an increase of 27,212 tons from the previous period. As of January 12, the copper inventory in the Shanghai Free Trade Zone is 111,000 tons, an increase of 9,200 tons from the previous period. LME copper inventory is 141,600 tons, an increase of 75 tons from the previous period. COMEX copper inventory is 529,500 short tons, an increase of 9,056 short tons from the previous period [8].

Core Viewpoint - The logic supporting copper price increases has not significantly changed, and after the adjustment, there is still potential for a rebound. The first quarter is typically a slow season, and without new drivers, prices may fluctuate before the Spring Festival. Post-holiday, with resumption of work and tight spot supply, copper prices may rise again. The short-term price range is expected to be 94,000 to 120,000 CNY/ton for Shanghai copper and 12,000 to 15,000 USD/ton for London copper. The strategy remains to buy on dips [3][17][26]. Focus Point 1: US-LME Price Spread - The recent convergence of the US-LME price spread is primarily due to delayed or canceled expectations regarding US copper tariffs, influenced by the postponement of timber tariff increases and the upcoming results of the silver 232 investigation, which may exempt silver tariffs and similarly affect copper tariffs. Additionally, US copper imports concentrated at the end of December, with current COMEX inventories reaching 500,000 tons. Future tariff expectations may still fluctuate [6][20]. Focus Point 2: Ongoing Supply Disruptions - Recent disruptions at mining sites have intensified expectations of tight raw material supply. The Mantoverde copper mine in Chile experienced a strike in early January, halting production of approximately 74,000 tons, with a potential monthly impact of 6,000 tons if the strike continues. Furthermore, the Mirador copper mine in Ecuador has delayed its second phase due to political changes, affecting the signing of mining contracts, with the timeline for production now uncertain. This mine was initially expected to contribute an additional 90,000 tons this year [8][22][24]. Focus Point 3: High Prices Suppressing Downstream Consumption - High copper prices are significantly suppressing consumption, with the operating rate of refined copper rods dropping from an average of 64% in December to 48%, resulting in a weekly sample production decrease of nearly 20,000 tons. Domestic social inventories accumulated nearly 80,000 tons in December, with an additional 54,000 tons accumulated in January so far, as some downstream sectors prepare to enter the Spring Festival holiday early, leading to weak consumption. This weakness in demand is limiting the upward price momentum, and downstream sectors require time to accept current prices [10][11][25]. Summary of Macro and Supply-Demand Dynamics - On the macro level, recent US economic data shows mixed PMI results, with manufacturing weakening and services slightly strengthening. Non-farm employment numbers have decreased, but the unemployment rate and wage growth have exceeded expectations, indicating a continued soft landing for the US economy. The backdrop of loose liquidity remains unchanged. In terms of supply and demand, global copper concentrate supply-demand tightness persists, with ongoing mining supply disruptions. The expected surplus of refined copper is narrowing, but high copper prices are significantly suppressing downstream consumption, leading to unexpected inventory accumulation domestically. Structurally, the convergence of the COMEX-LME premium is influenced by tariff expectations, with ongoing trade flows of refined copper from non-US regions to the US. If the US-LME price spread expands again, structural shortages may continue to support copper prices [12][26].