In recent years, global copper mine production—including that of China—has steadily increased modestly. However, in 2017, it declined slightly to 20.01 million metric tons of copper, representing a year-on-year decrease of 1.22%. Copper mine production includes copper concentrates, copper produced via wet-process smelting directly from copper ores, and the copper content from other associated minerals.

In Western developed countries, the main areas of copper consumption include electronics, construction, industrial machinery, transportation, and consumer goods. In China, the primary areas of copper consumption are power cables, air conditioners, construction, transportation (including automobiles), electronic consumer products, and other sectors.

In recent years, global refined copper consumption has been steadily increasing, driven primarily by China. According to CRU estimates, global refined copper production in 2017 reached 22.85 million metric tons of metal, representing a year-on-year increase of 2.5%. Among the world’s three major consumption regions in 2017, Asia consumed 16.4 million tons of refined copper, up 3.87% from the previous year—particularly China, whose contribution to the global consumption growth was indispensable. Europe consumed 3.583 million tons, down 0.6% year-on-year; North America consumed 2.228 million tons, up 0.45% year-on-year; Africa saw a slight increase in consumption, but its base figure was too low, at less than 200,000 tons; and South America consumed 424,000 tons, down 9.2% year-on-year.

The overall supply-and-demand situation for copper in China can be summarized as “one shortage, four global firsts, and one absence”—namely, a severe shortage of copper resources, with an external dependence approaching 80%; comprehensive reliance on imports for copper concentrates, electrolytic copper, and copper products; the world’s largest output and capacity for refined copper; the world’s largest output and capacity for copper-processed products; the world’s largest import volume of raw materials; the world’s largest copper consumption; and a lack of influence over copper prices.

China’s copper deposits are widely dispersed, have low grades, are difficult to mine and process, and are characterized by small-scale operations. As a result, copper resources are scarce, and the country is heavily reliant on imports. Currently, there are virtually no rich or large-scale copper deposits left.

According to data from the National Bureau of Statistics, in 2017, China’s output of copper concentrate containing copper was approximately 1.66 million tons (in terms of metal content), representing a year-on-year increase of 7.74%. Based on China’s copper consumption of around 11 million tons that year, even accounting for domestic scrap copper recycling, China’s dependence on foreign copper resources still exceeded 80%.

In 2017, China’s fixed-asset investment in copper mines reached 17.3 billion yuan, a year-on-year decrease of 28.31%. Although two relatively large copper mines—PuLang in Yunnan and Shaxi Copper Mine in Anhui—began production in 2017, adding a combined new capacity of 60,000 tons (in terms of metal content), this increase remains insignificant compared to China’s enormous demand. Although China will continue to see new copper mine projects come on stream over the next few years, it will still be difficult to meet the country’s massive consumption needs. It is expected that for quite some time to come, China will remain dependent on imports for its copper resources.

As is well known, over the years, China’s copper smelting capacity and output have continued to grow, primarily driven by steadily increasing demand. The raw materials for refined copper production mainly rely on copper concentrates and scrap copper. In 2017, China’s fixed-asset investment in copper smelting reached 24.16 billion yuan, representing a year-on-year increase of 26.8%.

Is China’s copper supply and demand actually characterized by a deficit or a surplus? From the perspective of copper resources, China undoubtedly faces a severe supply gap. However, when we factor in various forms of copper imports, China’s copper market is essentially in a state of surplus every year—because annual import volumes consistently exceed actual demand. Take 2017 as an example: that year, China’s refined copper production reached 8.007 million tons, while net imports totaled 2.906 million tons. Adding these two figures together, the total refined copper supply reached 10.913 million tons, whereas actual consumption was 10.74 million tons, resulting in a surplus of 173,000 tons for the year. In fact, for many years now, China’s refined copper supply has been in a mild surplus.

It turns out that from 2016 to 2017, China’s economic growth exceeded expectations. Corporate revenues improved significantly, and the Producer Price Index (PPI) continued to rise—a development largely driven by the comprehensive recovery of traditional industries such as steel, coal, petrochemicals, and nonferrous metals. As a result, market prices for these sectors kept climbing sharply, leading to a substantial increase in corporate profits. Consequently, from 2018 to 2019, if China’s GDP growth is to remain stable above 6.5%, it will still need to rely heavily on these traditional industries—especially those involving large-scale demand for energy and bulk raw materials, such as infrastructure and new energy sectors.

CRU forecasts that in 2018, the global copper concentrate supply gap will be approximately 1.46 million tons, while refined copper supply will exceed demand by about 1.27 million tons; China’s refined copper supply will exceed demand by roughly 24,000 tons. Antaike predicts that in 2018, China’s copper concentrate supply will exceed demand by 3.5 million tons, and its refined copper supply will exceed demand by 40,000 tons.

It is forecast that from the second half of 2018 to 2019, the LME three-month copper price will continue to fluctuate within a range, without any clear sustained downward or upward trend. The expected price range is between USD 6,000 and USD 8,200 per ton. Meanwhile, the Shanghai copper price will also follow London’s price fluctuations within a similar range.