Shanghai Copper Rises 3.51%
On January 12, Shanghai copper futures regained upward momentum.
The most active contract 2602 opened at 101,910 yuan/ton. It surged to an intraday high of 103,970 yuan/ton and hit a low of 101,520 yuan/ton. At 15:00, it closed at 103,800 yuan/ton. That’s a jump of 3,520 yuan, or 3.51%.
This rally is driven by macro policies, geopolitical conflicts and industrial transformation. It is reshaping the global copper industry chain at a faster-than-expected pace.
Macro Drivers: Dual Impacts of Policy and Geopolitics
(1) U.S. Employment Data: Mixed Picture, Fed Policy in Doubt
Data from the U.S. Department of Labor shows that nonfarm payrolls rose by 50,000 in December. This missed the market forecast of 60,000. November’s figure was revised down to 56,000 from the previous 64,000.
However, the December unemployment rate fell to 4.4%. It beat the 4.5% forecast and was down from 4.6% previously.
In terms of wages, month-on-month growth rebounded to 0.3% from 0.2%. Year-on-year growth jumped to 3.8%, the highest since September 2025.
December’s nonfarm payroll gain fell short of expectations. But the unemployment rate dropped and wages picked up. The overall performance was mixed.
Markets now expect the Fed to hold rates steady in January. But the future path of monetary policy remains uncertain.
A weaker U.S. dollar boosted commodity prices. It made dollar-denominated copper more attractive to foreign buyers. This in turn lifted copper prices.
(2) Fed Independence in Doubt: Market Worries Mount
On January 11 local time, Federal Reserve Chair Jerome Powell said the U.S. Department of Justice had issued a subpoena to the Fed. It also threatened criminal charges over his testimony on the Fed building renovation.
Powell called this a “pretext”. He said the U.S. government aimed to pressure him into cutting interest rates.
The news sparked concerns about Fed independence and U.S. dollar credibility. It further increased market volatility. It also provided macro support for rising copper prices.
(3) Geopolitical Conflicts: Fears Over Resource Stability Grow
Global geopolitical tensions are rising. Markets are increasingly worried about resource stability.
Precious metals traded strongly today. This had a bigger impact on non-ferrous metals. Lithium carbonate and Shanghai tin hit daily limits. This also lifted Shanghai copper.
Uncertainty from geopolitical risks pushed investors to safe-haven assets. As a key industrial metal and strategic resource, copper prices got support from geopolitical factors.
Industry Trends: Supply-Demand Game Intensifies
(1) Supply Side: Tight Ore Supply Continues, Processing Fees Under Pressure
Spot treatment and refining charges (TC/RCs) for domestic copper concentrate remain under pressure. Ore supply stays tight.
Chile’s state-owned miner Codelco reported lower output. Its copper production fell 3% year-on-year to 130,900 tons in November.
Escondida, the world’s largest copper mine owned by BHP, saw output drop 12.8% to 94,400 tons.
In addition, sources said Chilean miner Antofagasta reached a deal with a Chinese smelter last month. It will cut 2026 TC/RCs to zero. 2025 spot TC/RCs even turned negative. Smelters have to pay miners to process copper concentrate.
Tight ore supply is likely to push copper prices higher. Although domestic supplies are arriving and inventories are rising, any ore market changes trigger sharp market reactions. This is a key support for copper price gains.
(2) Demand Side: Short-Term Boost and Long-Term Drag Coexist
China’s Ministry of Finance announced it will cancel VAT export rebates for photovoltaic products starting April 1, 2026. The policy may prompt PV companies to rush production in the short term. This will drive phased growth in sector consumption and give a short-term boost to copper prices.
However, the consumption side has entered a seasonal lull. Year-end sentiment is growing. Downstream buyers are reluctant to accept current prices. Stockpiling demand is clearly suppressed. Spot market trading is sluggish. Price premiums remain under pressure.
Still, the full cancellation of PV export rebates may drive short-term metal demand on export rush expectations. Geopolitical tensions have escalated globally since the new year. Market worries over resource stability persist. This also provides some demand support for copper prices.
(3) Corporate Dynamics: Strategic Adjustments and Market Game
Pan Pacific Copper (PPC) is Japan’s largest refined copper supplier. Sources at the company said last Friday it proposed a record-high 2026 copper price premium of $330 per ton to domestic clients.
This physical delivery price is a premium over the London Metal Exchange (LME) benchmark copper price. It is more than three times the 2025 premium of $88.
The premium hike reflects a sharp drop in TC/RCs. It has pushed up raw material procurement costs. This forced the company to pass the burden on to clients.
In addition, market attention is focused on Rio Tinto’s talks to acquire Glencore. A successful bid would create the world’s largest mining company with a combined market value of nearly $207 billion.
Corporate strategic adjustments and M&A activities will affect the copper market’s supply structure and price trends. They have become key market focuses.
Technical Outlook and Market Forecast: Strong Bias, Cautious Optimism
Technically, copper prices will keep a strong bias in the short term. Multiple factors have combined to give strong upward momentum. But some uncertainties remain.
On one hand, macro policy uncertainty, escalating geopolitical risks and tight supply support copper prices. On the other hand, seasonal consumption lull, low downstream price acceptance and rising inventories weigh on copper price gains.