1. Report Industry Investment Rating - Copper: Neutral [6] - Options: Sell Put [6] 2. Core View of the Report - The imposition of a 25% tariff on certain semiconductors, semiconductor manufacturing equipment, and derivatives by the White House last week affected the market's outlook for non - ferrous metals demand. The copper price was also impacted, but the decline was relatively limited. Given the high copper price, weak downstream demand, and obvious inventory accumulation, the copper price may enter a temporary shock pattern, with an expected shock range of 99,500 yuan/ton to 110,000 yuan/ton [6]. 3. Summary by Relevant Catalogs 3.1 Market News and Important Data 3.1.1 Futures Quotes - On January 20, 2026, the main contract of Shanghai copper opened at 101,020 yuan/ton and closed at 101,230 yuan/ton, a 0.05% increase from the previous trading day's close. During the night session, it opened at 101,020 yuan/ton and closed at 99,930 yuan/ton, a 1.29% decrease from the afternoon close [1]. 3.1.2 Spot Situation - According to SMM, the spot price of SMM 1 electrolytic copper was at a discount of 280 - 20 yuan/ton to the 2602 contract, with an average discount of 150 yuan, a 30 - yuan decrease from the previous day. The spot price range was 100,270 - 101,180 yuan/ton. The main contract of copper futures first rose and then fell in the morning. The current high inventory outflow will suppress the premium, and downstream buyers only purchase on - demand at high copper prices. The spot is expected to maintain a discount pattern [2]. 3.2 Important Information Summary 3.2.1 Macro and Geopolitical Aspects - The Shanghai Futures Exchange will adjust the trading margin ratio and daily price limit for copper, aluminum, gold, and silver futures contracts starting from the close of trading on January 22, 2026. Geopolitically, Trump mentioned alternative measures for tariffs if the current tools are restricted, and the US Supreme Court has not ruled on Trump's tariff - related matters. Canada's military has simulated a US military invasion [3]. 3.2.2 Mining End - In November 2025, Peru's copper production decreased by 11.2% year - on - year to 216,152 metric tons. From January to November, the cumulative copper production increased by 1.6% compared to the same period in 2024, reaching 2.5 million tons. It is expected that Peru's copper production will only slightly increase to about 2.8 million tons in 2025, showing long - term growth challenges [4]. 3.2.3 Smelting and Imports - In December 2025, China's imports of scrap copper were 238,976.87 tons, a 14.83% increase from the previous month and a 9.90% increase year - on - year. Japan and Thailand were the top two sources of imports [4]. 3.2.4 Consumption - Last week, the copper price fluctuated narrowly. Due to the approaching month - end, downstream consumption had limited improvement. Some processing enterprises rushed to export, and the market demand was relatively stable. Downstream enterprises mainly made on - demand purchases at low prices [5]. 3.2.5 Inventory and Warehouse Receipts - LME warehouse receipts changed by 3,850 tons to 156,300 tons compared to the previous trading day. SHFE warehouse receipts changed by - 4,462 tons to 148,193 tons. On January 20, the domestic electrolytic copper spot inventory was 329,400 tons, a change of 8,500 tons from the previous week [5]. 3.3 Copper Price and Basis Data - The table provides data on SMM 1 copper (premium copper, flat - water copper, wet - process copper), Yangshan premium, LME (0 - 3), inventory (LME, SHFE, COMEX), warehouse receipts (SHFE, LME cancellation ratio), arbitrage (CU05 - CU02, CU03 - CU02), and import profit, as well as the Shanghai - London ratio (main contract) from different time points (January 21, 2026; January 20, 2026; January 14, 2026; December 22, 2025) [24][25][26][27]

Report Summary 1) Report Industry Investment Rating No industry investment rating is provided in the report. 2) Core View of the Report The U.S. employment data affects the interest - rate cut expectations, leading to a slight increase in copper prices. Copper production shows an increasing trend, and as the demand side is transitioning from the peak season to the off - season, the fundamentals limit the rebound space. With the release of U.S. economic data and the approaching of the interest - rate meeting, the trend of copper prices will become clearer [1]. 3) Summary by Relevant Catalogs Market Analysis - The U.S. initial jobless claims for the week ending October 18 were 232,000, and the continued jobless claims were 1.957 million, an increase from the previous week. In November, 5 smelters are expected to undergo maintenance, involving a crude smelting capacity of 1.5 million tons and an expected maintenance impact of 48,000 tons. However, some enterprises that underwent maintenance in October are resuming production, and with the increase in copper prices, production enthusiasm is rising, so output is expected to increase. The supply of scrap copper has increased, making up for the shortage of copper ore resources. The rise in copper prices has restricted downstream consumption, and except for the power and power battery new - energy sectors, downstream demand is weak. In October 2025, China's exports of unwrought copper and copper products were 134,304 tons, a year - on - year increase of 67.8%, and imports were 440,000 tons, a year - on - year decrease of 13.5% [1]. Futures and Spot Market - Futures: Shanghai copper opened lower and moved higher, showing strength during the day. - Spot: The spot premium in East China was 70 yuan/ton, and in South China was 35 yuan/ton. On November 18, 2025, the LME official price was $10,690/ton, and the spot premium was - $41/ton [4]. Supply Side - As of November 17, the spot crude smelting fee (TC) was - $41.82/dry ton, and the spot refining fee (RC) was - 4.37 cents/pound [6]. Fundamental Tracking - Inventory: SHFE copper inventory was 58,400 tons, a decrease of 2,522 tons from the previous period. As of November 17, the copper inventory in the Shanghai Free Trade Zone was 111,200 tons, an increase of 4,300 tons from the previous period. LME copper inventory was 140,500 tons, an increase of 325 tons from the previous period. COMEX copper inventory was 389,300 short tons, an increase of 3,221 short tons from the previous period [9].

Group 1 - In August 2025, China's copper material production reached 2.222 million tons, representing a year-on-year increase of 9.8% [1] - From January to August 2025, the cumulative production of copper materials was 16.598 million tons, with a year-on-year growth of 10.7% [1] - The refined copper (electrolytic copper) production in August 2025 was 1.301 million tons, showing a year-on-year increase of 14.8% [1] Group 2 - The cumulative refined copper production from January to August 2025 totaled 9.891 million tons, reflecting a year-on-year increase of 10.1% [1]

Group 1 - The core viewpoint of the report indicates that China's refined copper (electrolytic copper) production in July 2025 reached 1.27 million tons, representing a year-on-year increase of 14% [1] - Newly commissioned smelters are rapidly increasing their capacity utilization, while previously underperforming smelters are resuming production; however, some smelters are experiencing slight reductions in output due to tightening supply of raw materials [1] - In August, only one smelter had maintenance plans, and the reduction in output due to maintenance was minimal; however, the number of smelters reducing production due to tight supply of copper concentrate and raw materials increased compared to July [1] Group 2 - The end of maintenance and the ongoing ramp-up of newly commissioned smelters in East China are expected to stimulate production [1]

Investment Rating - Industry Rating: Recommended [5] Core Insights - The report highlights a significant increase in copper production for Q2 2025, with a year-on-year growth of 40.3% to 57,416 tonnes, primarily driven by increased output from Mantoverde and Mantos Blancos [1][2] - The C1 cash cost for copper in Q2 2025 was reported at $2.45 per pound, a decrease of 12.5% year-on-year, attributed to higher production volumes and lower production costs [2] - The average realized copper price in Q2 2025 was $4.39 per pound, reflecting a 3.1% decline year-on-year but a 0.7% increase quarter-on-quarter [2] Production and Operational Performance - Q2 2025 copper sales reached 53,977 tonnes, marking a 35.8% increase year-on-year, although it fell short of production by approximately 1,800 tonnes due to sales scheduling at Mantos Blancos [1] - The report indicates that the total sulphide production for Q2 2025 was 47,086 tonnes, compared to 30,374 tonnes in Q2 2024, showcasing a robust operational performance [10] - The report also details the production costs for various sites, with Mantoverde's C1 cash cost at $1.51 per pound and Mantos Blancos at $1.87 per pound [10] Financial Performance - The company reported revenues of $543.2 million for Q2 2025, a 38.2% increase year-on-year [3][13] - Net income attributable to shareholders for Q2 2025 was $30 million, a 9.1% increase compared to the previous year, recovering from a loss of $1.2 million in Q1 2025 [3][13] - Adjusted EBITDA for Q2 2025 was $215.6 million, reflecting a 75.1% increase year-on-year, driven by higher sulphide production [3][13] Debt and Liquidity - As of March 31, 2025, net debt stood at $788.1 million, slightly up from $742 million at the end of 2024, primarily due to working capital changes [4][8] - By June 30, 2025, net debt decreased to $691.9 million, indicating improved liquidity and financial management [8] 2025 Guidance - The company reaffirmed its 2025 guidance for total copper production between 220,000 to 250,000 tonnes, with C1 cash costs projected between $2.20 to $2.50 per pound [9] - Capital expenditures are expected to be $315 million, with exploration spending set at $25 million [9]

Group 1 - The core viewpoint is that Peru's mining sector is expected to see significant investment and production growth in the current year [1] Group 2 - Mining investment in Peru is projected to reach $4.8 billion this year [1] - Copper production in Peru is anticipated to reach 2.8 million tons this year [1]