Report Summary 1. Report Industry Investment Rating - No information provided 2. Core Viewpoints - The fundamentals of the copper market need time to recover. High copper prices are suppressing downstream demand, and high inventories are capping the upside. However, tight supply and overall support from the non - ferrous metals sector make copper prices more likely to rise than fall. Geopolitical factors such as the situation in Iran and the Geneva negotiations should be closely monitored for potential market volatility [1]. 3. Summary by Relevant Catalogs 3.1. Market Analysis - **Market sentiment**: The US has moved from the "strategic deterrence stage" to the "executable options stage" in the Iran issue, and military options are now in the decision - making range. This may cause market fluctuations due to risk - aversion sentiment [1]. - **Supply**: During the holiday, the upstream smelting load was relatively normal, and subsequent copper supply will remain high and stable. In January, production was 1.57 million tons more than expected. SMM predicts that the production of electrolytic copper in China in February will decrease by 3.58 million tons month - on - month (a 3.04% decline) and increase by 8.06% year - on - year [1]. - **Demand**: As of December 2025, the apparent consumption of copper was 1.3188 million tons, a 4.00% increase from the previous month. Downstream factories have not fully resumed production, resulting in low market trading activity. High copper prices are suppressing downstream demand [1]. - **Inventory**: SHFE copper inventory is 287,800 tons, an increase of 1,070 tons from the previous period. As of February 12, Shanghai bonded - area copper inventory is 84,700 tons, a decrease of 6,400 tons from the previous period. LME copper inventory is 243,200 tons, an increase of 1,350 tons from the previous period. COMEX copper inventory is 601,600 short tons, an increase of 1,734 short tons from the previous period [13]. 3.2. Futures and Spot Market Conditions - **Futures**: Shanghai copper opened higher and trended higher during the day, showing strength [1][4]. - **Spot**: The spot premium in East China is - 185 yuan/ton, and in South China is - 225 yuan/ton. On February 24, 2026, the LME official price is 13,100 US dollars/ton, and the spot premium is - 89 US dollars/ton [4]. 3.3. Supply - side Information - As of February 24, the spot smelting fee (TC) is - 50.97 US dollars/dry ton, and the spot refining fee (RC) is - 5.02 US cents/pound [9].

Core Viewpoint - The U.S. government has announced a 50% tariff on imported copper semi-finished products and high-copper-content derivatives, effective August 1, which has led to a significant drop in copper prices on the COMEX, highlighting the unexpected nature of the policy and its impact on the market [3][9]. Group 1: Tariff Impact - The 50% tariff applies to copper semi-finished products such as copper pipes, wires, rods, and sheets, as well as high-copper-content derivatives like fittings and electrical components, while excluding copper ore, concentrates, and cathodes [9][10]. - Following the announcement, COMEX copper futures prices fell by over 18% in a single day, marking the largest single-day drop in history [3][5]. - The market had anticipated a broader application of tariffs, leading to a miscalculation by major investment banks like Goldman Sachs, which had advised clients to buy call options on copper futures prior to the announcement [3][6]. Group 2: Market Reactions - The COMEX-LME (London Metal Exchange) copper premium rose from a neutral position to approximately 30% before the tariff announcement, driven by speculation about the tariffs [5][10]. - After the tariff announcement, the COMEX copper premium returned to a neutral position, indicating a significant market correction [5][10]. - Investors who had taken long positions in copper futures prior to the announcement faced substantial losses due to the rapid price decline [6][7]. Group 3: Supply and Demand Dynamics - The U.S. has a significant annual copper consumption of approximately 1.7 million tons, with a production shortfall of about 770,000 tons, necessitating imports primarily from Chile, Canada, and Mexico [9][10]. - The U.S. copper import policy aims to protect domestic production capabilities, as the country has limited smelting capacity, producing only about 3.3% of global refined copper [10][11]. - Analysts suggest that the copper market will need to adjust to the new tariff environment, with potential long-term implications for supply and demand dynamics, particularly as the market digests the impact of the tariffs [13][14]. Group 4: Future Outlook - Analysts predict that the main factors influencing copper prices in the second half of the year will include copper concentrate shortages, rising raw material costs, and the potential for a U.S. interest rate cut [13][14]. - The copper market is expected to return to fundamental supply and demand considerations, with the recent tariff policy's negative impact largely absorbed by the market [14]. - There is a recommendation for investors to consider trading in less policy-affected markets like LME and SHFE (Shanghai Futures Exchange) copper futures, as the long-term upward trend in copper prices remains intact despite short-term volatility [14].

Investment Rating - The report maintains an "Accumulate" rating for the copper industry, indicating a positive outlook for investment opportunities in this sector [5]. Core Insights - The copper pricing mechanism is shifting from macroeconomic factors to supply-demand fundamentals, with expectations of price fluctuations in 2024 and a potential increase in 2025 due to intensified supply-demand conflicts [1][11]. - Global copper supply is primarily dominated by Latin America, particularly Chile and Peru, but growth in copper production is slowing down, with significant investments in exploration declining [2][16]. - Demand for copper is expected to remain robust, driven by sectors such as power infrastructure, electric vehicles, and home appliances, despite some downward pressure from the real estate sector [3][12]. Summary by Sections 1. Copper Pricing Dynamics - The copper price in 2024 is expected to be influenced by macroeconomic easing and supply disruptions, leading to a volatile market [1][11]. - The second half of 2024 may see a price correction as macroeconomic benefits are absorbed and demand remains subdued [12]. 2. Copper Supply - The global copper mining supply is primarily concentrated in Latin America, with Chile and Peru holding significant reserves [2][16]. - The growth rate of copper mining investments is slowing, indicating a tightening supply trend in the long term [2][16]. - Key mining projects in Africa and Asia may face delays due to geopolitical risks and stricter environmental regulations [2]. 3. Copper Demand - Global refined copper consumption is steadily increasing, with strong demand from the power construction and new energy vehicle sectors [3][12]. - The demand for copper is expected to remain high due to ongoing investments in electric grid upgrades and renewable energy installations [3][12]. - Future demand dynamics will depend on policy developments and the evolution of the industrial chain [3][12]. 4. Key Investment Targets - Zijin Mining and Luoyang Molybdenum are highlighted as key investment targets due to their growth potential and strong performance in the copper sector [4].