COMEX Copper Futures Near Record High as Supply Deficit Fears Intensify

Frequent Supply Disruptions Highlight Copper Mine Capacity Bottlenecks

COMEX copper futures have recently strengthened, approaching historical highs, as market expectations of a global copper supply deficit intensify. On the supply side, major copper-producing countries have faced a series of force majeure events: some large mines in South America have been forced to cut output or shut down due to community protests, equipment aging, and declining ore grades; unstable electricity supply in the Democratic Republic of Congo and Zambia has also constrained local concentrate production. According to industry statistics, the growth rate of global copper mine output in 2024 has been significantly revised down from earlier expectations, with actual incremental output likely less than half of previous estimates. Additionally, global copper concentrate treatment and refining charges (TC/RC) remain at low levels, reflecting the transmission of tight mine supply to the smelting stage, with some small and medium-sized smelters already facing raw material shortages.

China Demand Recovery Expectations and Inventory Drawdown Converge

As the world's largest copper consumer, China has recently rolled out a series of growth-stabilizing policies, including increased grid investment, promotion of new energy vehicles in rural areas, and financing for real estate "whitelist" projects, significantly boosting market confidence in copper end-use demand. Meanwhile, total copper inventories across the three major exchanges (LME, COMEX, SHFE) have fallen to multi-year lows, with COMEX inventories particularly drawing down, further reinforcing the tight spot market. According to market participant feedback, operating rates at downstream copper rod and tube processing plants have recovered month-on-month, with restocking intentions strengthening, while scrap copper supply has also seen a temporary contraction due to environmental inspections, increasing demand for refined copper as a substitute.

Macro Sentiment and Fund Flows Align

On the macro front, market expectations of a Fed rate cut this year remain volatile, but the US dollar index is under overall pressure, supporting dollar-denominated copper prices. At the same time, global manufacturing PMI data has marginally improved, particularly with a rebound in new orders indices for the US and Eurozone, suggesting the industrial metals demand cycle may have bottomed. On the fund flow side, COMEX copper futures non-commercial net long positions have increased significantly recently, with hedge funds and other speculative capital re-entering, pushing prices through key resistance levels. Technical analysts note that copper prices have formed an upward channel, and a break above previous historical highs could trigger program trading buy orders.

Outlook: High Volatility Likely; Watch Downstream Pass-Through Effects

Looking ahead, copper prices will remain supported in the short term by supply deficit logic, but further upside will depend on demand exceeding expectations. If China's real estate completion data fails to improve sustainably, or if global mine restart progress accelerates, copper prices could face downward pressure. For downstream industries, high copper prices have begun to squeeze profit margins in sectors such as wire and cable and air conditioning, with some small and medium-sized enterprises forced to slow procurement, instead consuming inventories or seeking substitute materials. According to industry analysis, if copper prices remain at current levels for more than a quarter, pressure to raise prices on downstream end products will gradually emerge, potentially curbing some non-essential demand. Overall, the copper market is at a critical stage of supply-demand rebalancing, and investors should closely monitor inventory changes, mine dynamics, and the effectiveness of China's policy implementation.