Group 1: Report Industry Investment Rating - No relevant content Group 2: Core Viewpoints of the Report - On December 24, 2025, Shanghai copper opened higher and moved higher, rising during the day. The production of electrolytic copper in China in November increased both month - on - month and year - on - year, and SMM expects a further increase in December. The profit of copper products was squeezed this week, the production enthusiasm of copper strips was weak, and the market trading activity was suppressed. Copper foil maintained a high - prosperity level. The zero long - term pricing of mine processing fees last week boosted market sentiment, and the Fed's game and the rise of precious metals were beneficial to copper prices, but the weak procurement sentiment of downstream enterprises may lead to a spot price correction [1]. Group 3: Summary by Relevant Catalogs 1. Market Analysis - In November, SMM China's electrolytic copper production was 1.1031 million tons, a month - on - month increase of 11,500 tons (1.05%) and a year - on - year increase of 9.75%. From January to November, the cumulative production increased by 1.2894 million tons, an increase of 11.76%. SMM expects the electrolytic copper production in December to increase by 65,700 tons month - on - month (5.96%) and 6.69% year - on - year. The profit of copper products was squeezed this week, the production enthusiasm of copper strips was weak, and the production rhythm of enterprises slowed down. Copper tube enterprises were restricted by capital pressure and mostly chose to wait and see. Copper foil maintained a high - prosperity level due to the demand for energy - storage batteries and new - energy vehicles. The zero long - term pricing of mine processing fees last week boosted market sentiment, and the Fed's game and the rise of precious metals were beneficial to copper prices, but the weak procurement sentiment of downstream enterprises may lead to a spot price correction [1]. 2. Futures and Spot Market Conditions - Futures: Shanghai copper opened higher and moved higher, rising during the day. Spot: On December 24, 2025, the spot premium in East China was - 290 yuan/ton, and in South China was - 150 yuan/ton. On December 22, 2025, the LME official price was $12,039/ton, and the spot premium was + $31/ton [4]. 3. Supply Side - As of December 22, the spot smelting fee (TC) was - $43.98/dry ton, and the spot refining fee (RC) was - 4.58 cents/pound [8]. 4. Fundamental Tracking - Inventory: SHFE copper inventory was 52,200 tons, an increase of 2,679 tons from the previous period. As of December 22, the copper inventory in Shanghai Free Trade Zone was 98,800 tons, an increase of 100 tons from the previous period. LME copper inventory was 157,000 tons, an increase of 825 tons from the previous period. COMEX copper inventory was 471,600 short tons, an increase of 4,276 short tons from the previous period [11].

Investment Rating - The investment rating for the copper industry is "Outperform the Market" (maintained) [2][12] Core Viewpoints - Recent changes in copper processing material output align with terminal industry trends, with high demand in the power electronics, new energy vehicles, and air conditioning sectors driving growth in copper strips, foils, and pipes. Conversely, products related to real estate and construction, such as brass rods and brass strips, have seen stagnant or declining output [3][12] - Looking ahead to 2025, investment in the power sector is expected to maintain high growth, while home appliances will continue to benefit from national subsidies. Although growth in solar energy and new energy vehicles may slow, the drag from the real estate and construction sector is expected to lessen, indicating resilient copper demand overall [3][12] - With limited growth in copper supply, the copper market is expected to remain in a tight balance, keeping copper prices at elevated levels. It is recommended to continue monitoring copper mining stocks that benefit from high copper prices, including Zijin Mining, Luoyang Molybdenum, Jincheng Mining, Wanguo Resources, Western Mining, and China Nonferrous Mining [3][12] Summary by Sections Copper Processing Material Output - In 2024, China's copper processing material output is projected to increase by 1.9% year-on-year, reaching 21.25 million tons. The output growth is primarily driven by copper foils and pipes, which correspond to high demand in lithium battery foils and air conditioning pipes [4][12] - From 2020 to 2024, the average annual growth rate of copper processing material output is maintained at 3%, with copper foil showing a compound annual growth rate (CAGR) of 22%, significantly outpacing other categories [4][12] Copper Foil - The growth in copper foil output is mainly attributed to lithium battery copper foils, which saw a 143% increase in 2024 compared to 2021. However, this growth rate is lower than the 257% increase in domestic power battery output during the same period, primarily due to the trend of thinner lithium battery copper foils [7][12] Copper Strip - The production of purple copper strips has surpassed that of brass strips since 2022, with purple copper strips accounting for 45% of the total copper strip output in 2024. This shift is driven by increased demand in the power, electronics, and communications sectors [8][12] Copper Pipe - In 2024, the total output of copper pipes is expected to be 2.36 million tons, with purple copper pipes making up 2.24 million tons. The growth in copper pipe output is largely driven by the demand for purple inner threaded pipes, which have higher heat exchange efficiency due to their larger contact area [10][12]