1. Report Industry Investment Rating - Copper: Cautious and bullish [6] - Arbitrage: Suspended [7] - Options: Short put [7] 2. Core Viewpoints of the Report - In December 2025, the Fed's interest - rate meeting cut rates by 25 basis points as expected, and copper prices remained strong. The closing out of short hedging positions at the end of the year also pushed up copper prices. However, these factors will gradually fade, so the continuous sharp rise of copper prices may slow down. It is recommended to buy on dips for hedging, with the suggested range between 90,500 yuan/ton and 91,000 yuan/ton [6][7] 3. Summary by Relevant Catalogs Market News and Important Data Futures Quotes - On December 17, 2025, the Shanghai copper main contract opened at 92,210 yuan/ton and closed at 92,820 yuan/ton, up 0.98% from the previous trading - day's closing. The night - session of the Shanghai copper main contract opened at 92,830 yuan/ton and closed at 92,860 yuan/ton, up 0.04% from the afternoon closing [1] Spot Situation - According to SMM, the spot price of SMM 1 electrolytic copper was at a discount of 200 - 100 yuan/ton to the next - month 2601 contract, with an average discount of 150 yuan/ton, 25 yuan lower than the previous day. The spot price range was 92,000 - 92,290 yuan/ton. Sellers were active in shipping, but downstream procurement was weak, and spot premiums continued to decline. The end - of - year consumption is expected to remain weak, and spot premiums may continue to decline slightly [2] Important Information Summary Macro and Geopolitical - Fed Governor Waller said there is a 50 - 100 basis - point rate - cut space. Trump ordered a "full and complete blockade" of sanctioned oil tankers in and out of Venezuela and labeled the Venezuelan government a "foreign terrorist organization". US and Russian officials are expected to meet in Miami this weekend [3] Mining - On December 17, Fortescue Metals Group will acquire 64% of the outstanding common shares of Alta Copper for C$139 million (about $101 million), aiming for full control. Alta Copper's core asset is the Cañariaco copper project in Peru. The transaction is expected to complete in Q1 2026 [4] Smelting and Import - Qianbi Copper Smelting Co., Ltd. of China Non - Ferrous Metals Group exceeded the planned targets for main product output and total profit from January to November. As of November, copper product output reached 91.53% of the annual target [5] Consumption - In November 2025, China's copper industry prosperity index was 39.7, down 2.0 points from the previous month. The leading index was 73.4, down 2.1 points, and the coincident index was 74.3, down 3.6 points [5] Inventory and Warehouse Receipts - LME warehouse receipts changed by 725 tons to 166,925 tons. SHFE warehouse receipts changed by - 907 tons to 44,877 tons. On December 18, the domestic electrolytic copper spot inventory was 164,500 tons, a change of 15,000 tons from the previous week [5] Copper Price and Basis Data | Category | Project | 2025 - 12 - 18 | 2025 - 12 - 17 | 2025 - 12 - 11 | 2025 - 11 - 18 | | --- | --- | --- | --- | --- | --- | | Spot (Premium/Discount) | SMM: 1 Copper | - 150 | - 125 | 30 | 105 | | | Premium Copper | - 125 | - 80 | 80 | 165 | | | Flat - water Copper | - 180 | - 150 | - 10 | 65 | | | Wet - process Copper | - 220 | - 200 | - 50 | 5 | | | Yangshan Premium | 50 | 48 | 48 | 47 | | | LME (0 - 3) | - 10 | - 4 | 0 | 4 | | Inventory | LME | 166,925 | 166,600 | 164,975 | 136,050 | | | SHFE | 89,389 | | 88,905 | | | | COMEX | 412,441 | 410,789 | 401,925 | 345,906 | | Warehouse Receipts | SHFE Warehouse Receipts | 44,877 | 45,784 | 28,931 | 56,965 | | | LME Cancelled Warehouse Receipt Ratio | 38.66% | 39.43% | 38.09% | 6.96% | | Arbitrage | CU2604 - CU2601 (Three - month - near - month) | 150 | | 130 | 130 | 80 | | | CU2602 - CU2601 (Main - near - month) | 100 | | 80 | 70 | 120 | | | CU2602/AL2602 | 4.24 | 4.21 | 4.19 | 3.98 | | | CU2602/ZN2602 | 4.04 | 3.99 | 3.98 | 3.85 | | | Import Profit | - 1049 | - 675 | - 946 | - 924 | | | Shanghai - London Ratio (Main) | 7.90 | 7.91 | 7.95 | 8.03 | [24][25][26][27]

1. Report Industry Investment Rating - Copper: Neutral [7] - Arbitrage: On Hold [7] - Options: short put@77000 yuan/ton, short call@80000 yuan/ton [7] 2. Core View of the Report - Currently, the processing fee has rebounded, but the shortage of mine resources is difficult to change. Consumption is not expected to perform well, but with relatively stable grid orders, the overall price is expected to fluctuate. The development of the Putin-Biden meeting and the performance of the domestic equity market may impact copper prices. The report suggests a neutral stance on copper, puts arbitrage on hold, and provides option strategies [7]. 3. Summary by Relevant Catalogs 3.1 Futures Market - On August 20, 2025, the Shanghai copper main contract opened at 78,690 yuan/ton and closed at 78,640 yuan/ton, a -0.32% decline from the previous trading day's close. During the night session, it opened at 78,560 yuan/ton and closed at 78,730 yuan/ton, a 0.11% increase from the afternoon close [1]. 3.2 Spot Market - According to SMM, on the previous day, the spot price of SMM 1 electrolytic copper was at a premium of 130 - 250 yuan/ton to the current 2509 contract, with an average premium of 190 yuan/ton, a 5 yuan/ton decrease from the previous trading day. The price of SMM 1 electrolytic copper was in the range of 78,670 - 78,870 yuan/ton. The purchase and sales sentiment in Shanghai increased. It is expected that domestic supplies will continue to be supplemented, and the spot premium of Shanghai copper will face continued pressure [2]. 3.3 Important Information Summary 3.3.1 Macroeconomic - The minutes of the Federal Reserve's July monetary policy meeting showed that tariffs pose upward pressure on commodity price inflation, but the increase in the cost of imported goods including tariffs will be less than previously predicted and the time of increase will be postponed. The labor market is expected to weaken, and the unemployment rate is expected to rise above the estimated natural unemployment rate by the end of this year and remain above it until 2027 [3]. 3.3.2 Mine End - Tudor Gold has submitted an underground exploration permit application for the Treaty Creek gold-copper mine project. First Quantum Minerals has launched a $1.25 billion expansion project for the Kansanshi copper mine in Zambia, which is expected to nearly double the ore processing capacity, increase smelter capacity by about 25%, and increase the average annual copper production to 250,000 tons by 2044 [4]. 3.3.3 Smelting and Import - The Hong Kong delivery warehouse of the London Metal Exchange was inaugurated. China's refined copper production in July 2025 was 1.27 million tons, a 14% year-on-year increase. Some smelters have reduced production due to shortages of copper concentrate and scrap. In August, the number of smelters reducing production has increased compared to July [5]. 3.3.4 Consumption - The monthly prosperity index of China's copper industry in July was 41.8, up 0.9 points from June, continuing to operate in the "normal" range [6]. 3.3.5 Inventory - LME warehouse receipts decreased by 450 tons to 156,350 tons, and SHFE warehouse receipts decreased by 275 tons to 25,223 tons. On August 18, the domestic electrolytic copper spot inventory was 1.337 million tons, an increase of 81,000 tons from the previous week [6].