Tight Supply-Demand Balance Persists; Power Investment Drives Up Copper Demand

Non-ferrous metals have emerged as a hot spot in the A-share market recently. Among them, 铜, known as “red gold”, saw a new round of price gains at the start of 2026 after rising 34.34% in 2025. According to data disclosed by 100ppi Business Information Co., Ltd., the latest copper price hit 101,600 yuan per ton on January 29, up 35.08% year-on-year.

Industry insiders believe that on the whole, the energy transition and digital revolution underpin the long-term growth in copper demand. Take electrolytic copper as an example: a research report by Tonghui Futures shows that the end demand for electrolytic copper in 2026 will follow the pattern of “stabilized traditional demand and booming emerging demand”, with global demand expected to exceed 29 million metric tons, nearly half of which will be driven by power investment.

Robust Growth in Copper Demand

Shanghai Non-Ferrous Metals Network (SMM) forecasts that in 2025, China’s downstream 铜 consumption was mainly in the power sector, accounting for 43% of the national total. This was followed by transportation, household appliances, mechanical and electronic equipment, and construction, with respective shares of 15%, 13%, 11% and 11%.

Currently, with the rapid growth of the emerging economy, new energy vehicles, the AI industry and power grids will drive copper demand growth, painting a promising picture for the metal’s long-term demand. Zeng Jianhui, an analyst at the Copper Business Department of Shanghai Steel Union, said in an interview: “Traditional sectors are still sustaining the basic copper demand at present, while the new energy and AI industries will become new growth drivers for copper demand in the future.”

On January 15, State Grid Corporation of China (SGCC) officially announced that its total fixed asset investment will reach 4 trillion yuan during the 15th Five-Year Plan period (2026-2030), a 40% increase from the 14th Five-Year Plan period. The move aims to expand effective investment and boost the high-quality development of the industrial and supply chains for the new power system.

According to SGCC’s official website, the investment will focus on scientific and technological innovation and the construction of the new power system. Specific initiatives include: adding an average of about 200 GW of installed wind and solar energy capacity annually in its operating areas; basically completing a new power grid platform integrating transmission, distribution and microgrids and accelerating the construction of UHV DC transmission channels; speeding up the development of distribution networks in urban, rural and remote areas and exploring end-supply guarantee and off-grid microgrid models; and consolidating digital and intelligent infrastructure.

Meanwhile, China Southern Power Grid Co., Ltd. will arrange 180 billion yuan in fixed asset investment in 2026, hitting a new high for five consecutive years with an average annual growth rate of 9.5%. The investment will focus on the construction of the new power system, the development of strategic emerging industries, and the improvement of high-quality power supply services. These efforts will serve as a solid anchor for the long-term demand in the 铜 market.

Long Aoming, an analyst at Baocheng Futures, noted that the development of the three key areas of UHV, distribution networks and new energy will drive copper consumption directly and steadily, further consolidating copper’s core strategic position in the energy transition.

Tight Supply-Demand Balance Remains

The growth in copper demand driven by power infrastructure investment has coincided with the tight supply-demand balance in the global copper market, further boosting the upward price elasticity of copper. GF Securities believes that new infrastructure underpins the strong resilience of copper demand, predicting that the global copper market will maintain a tight supply-demand balance in the future and copper prices will keep trending upward.

My Iron and Steel Research Center (MRI) revealed that hampered by declining ore grades, mine earthquakes, production accidents, equipment maintenance and other factors, six major overseas mining enterprises – Glencore, Ivanhoe Mines, Teck Resources, Nornickel, Codelco and Freeport-McMoRan – have cut their annual production plans by 525,500 metric tons from the start of the year. Global copper ore supply may edge down 0.1% to 23.097 million metric tons in 2025, and the tight supply of copper ore will persist throughout the year.

Zeng Jianhui further explained that on the supply side, global copper concentrate supply in 2026 will see little change from 2025, keeping the market in an overall tight supply situation. “It is predicted that although copper concentrate supply will grow in 2026, its growth rate will lag far behind the increased demand for 铜 concentrate from smelting activities.”

Against this backdrop, the global mining industry is ramping up investment in copper resource development.

On January 9, two international mining giants – Rio Tinto and Glencore – issued a joint statement announcing the launch of merger and acquisition negotiations. The two sides have held initial discussions on the merger of some or all of their businesses, which may include an all-stock merger between the two companies. If the merger is completed, resource integration is expected to reshape their copper supply potential.

Chinese enterprises are also playing an increasingly important role in global copper mine investment. Li Ying, a senior mining analyst at S&P Global Market Intelligence, said that in the past few years, China has accelerated the layout of overseas copper mine projects. Between 2016 and 2024, China’s domestic copper ore output rose by 25%, while its overseas attributable output surged by nearly 370%. This achievement is thanks to the active efforts of Chinese mining enterprises such as Zijin Mining Group Co., Ltd., which have acquired and developed large-scale copper mines in Africa, South America and other regions, achieving simultaneous growth in output and profits.

A relevant person in charge of Yunnan Copper Co., Ltd. said in an interview with the Securities Daily: “We are drafting the company’s 15th Five-Year Plan, conducting systematic demonstration and forward-looking layout of our future resource acquisition strategy. In recent years, the company has attached great importance to mine resource replacement, resource reserve increase and production expansion, continued to increase capital investment, and carried out comprehensive geological research in various mining areas and prospecting work in the deep and peripheral parts of mines. Meanwhile, on the basis of well operating our existing mines and smelters, we have been actively looking into high-quality resource projects.”

Looking ahead to the market outlook, Zeng Jianhui said that copper prices will maintain a generally strong trend. “The drivers for the strong 铜 prices include tight supply with the persisting shortage at the ore end and no improvement in smelting processing fees, as well as upbeat demand expectations driven by the new energy, AI, power and other sectors.”