2017 With the continued recovery of the global economy and the deepening restructuring of China’s industrial structure, the supply-and-demand situation in the copper market has significantly improved. As a result, copper prices have generally shifted upward, and the profitability of mining, smelting, and even processing enterprises has markedly enhanced, presenting an industry landscape that is stable yet steadily improving.

2017 Annual Overview of the Copper Industry Performance

1. Production continues to maintain growth.

According to preliminary statistics from the National Bureau of Statistics, as of... 2017 Year 11 In the month, the copper concentrate's copper content output reached 150 Ten thousand tons, up year-on-year 4.64% Among them, the copper concentrate production with copper content in Jiangxi and Yunnan provinces exceeded. 20 10,000 tons. Meanwhile, two relatively significant copper mines have come into production this year: the Pulang Copper Mine in Yunnan and the Shaxi Copper Mine in Anhui, collectively adding new capacity. 6 10,000 tons. The cumulative output of electrolytic copper has reached 808.5 Ten thousand tons, up year-on-year 6.77% Based on this, it is expected that the annual electrolytic copper production will exceed... 880 Ten thousand tons, with an increase of 6% From a regional perspective, Shandong, Jiangxi, and Anhui all have production levels exceeding... 100 Ten thousand tons, total output 260 Ten thousand tons, accounting for the nation's total output. 32% Continue to consolidate its position as a major copper-producing province; in particular, Shandong Province boasts distinct regional advantages, and the trend of capacity expansion is accelerating. From the perspective of enterprise production: 2017 The total output of the top ten companies ranked by year reached 625 10,000 tons, an increase compared to the same period last year. 4% . Also, previously 11 months, copper processing material output 1764 Ten thousand tons, up year-on-year 5.30% 。

2. Enterprise economic performance has significantly rebounded.

According to statistics from the National Bureau of Statistics, 2017 Year 1-11 Month, 1752 Profit achieved by copper industry enterprises under the company's regulations. 465.4 100 million yuan, up year-on-year 32.7%, The profit achieved by non-ferrous metal enterprises under the planning regulations. 21.5% Among them, copper mining and processing enterprises achieved profits. 58.8 100 million yuan, growth 160.1% ; Copper smelting enterprises achieve profits 156.5 100 million yuan, growth 43.1% ; Copper processing enterprises achieve profits. 250.0 100 million yuan, growth 14.3% 。

3. Investment in the copper industry continues to decline.

As of 2017 Year 1-11 The copper industry has completed its fixed-asset investment. 884 100 million yuan, down year-on-year 1.1% , accounting for the fixed-asset investment completed in nonferrous metals during the same period. 16% Among them, the decline in fixed-asset investment in copper mines continued to widen, falling year-on-year. 28.05% ; Copper smelting investment completed, with year-on-year growth. 32.94% Copper processing investment remained roughly flat compared to last year, with a slight decrease.

4. Imports of refined copper declined, while the growth rate of copper ore imports slowed down.

According to customs statistics, 2017 Year 1-11 The import trade volume of moon copper products reached 528 hundreds of millions of dollars, an increase year-on-year 25% , the export trade volume reached 51.1 hundred million U.S. dollars, up year-on-year 8.4% Trade deficit 476.9 hundred million U.S. dollars. Among them, refined copper imports 297.4 10,000 tons, down year-on-year 10.26% ; Imported copper ore 1568 Ten thousand tons, up year-on-year 1.91% 。

5. Copper prices are fluctuating and trending upward, with the center of gravity shifting higher.

2017 Copper prices generally showed a volatile upward trend throughout the year. LME The average price for the March quarter is 6190 U.S. dollar / ton, SHFE The average price for the March quarter is 49309 Yuan / tons, representing increases compared to the same period last year. 27% and 29% If we say... 2006 Year and 2011 The year-on-year price increase was driven by demand from the consumer end, so... 2017 Price increases over the year tend to be driven by supply-side factors, such as rising costs and reduced supply.

2017 Annual Industry Operation Characteristics and Issues

1. Environmental protection pressures are becoming increasingly prominent.

The report of the 19th National Congress pointed out that, “ To promote green development, we must establish legal frameworks and policy guidelines for green production and consumption. ” It can be said that China’s sustainable development has now reached a new height of green development, and the focus of development is shifting from scale-based benefits to quality-based and environmental benefits.

2017 Since then, the state has introduced a series of laws, regulations, and standards related to environmental protection, including the “Environmental Protection Tax Law of the People’s Republic of China,” the “Interim Provisions on the Administration of Pollution Discharge Permits,” the “Work Plan for Clearing Mining Rights within Nature Reserves,” and the “Beijing-Tianjin-Hebei Region and Surrounding Areas…” 2017-2018 The “Comprehensive Joint Action Plan for the Comprehensive Governance of Atmospheric Pollution during Autumn and Winter,” and the “Beijing-Tianjin-Hebei Region and Surrounding Areas” 2017 The “Annual Work Plan for Air Pollution Prevention,” the “Implementation Plan for Prohibiting the Entry of Foreign Waste and Promoting Reform of the Solid Waste Import Management System,” the “Guiding Opinions on Strengthening Green Industrial Development in the Yangtze River Economic Belt,” the “Opinions on Accelerating the Construction of Green Mines,” the “Draft Law of the People’s Republic of China on Soil Pollution Prevention and Control,” the “Environmental Protection Control Standards for Imported Solid Wastes Usable as Raw Materials (Waste Non-Ferrous Metals),” the “Reform Plan for the Compensation System for Ecological and Environmental Damage,” and the “Work Plan for Clearing Mining Rights within Nature Reserves”—among others. From the current situation, although the impact of environmental protection policies on the production of both upstream and downstream copper industries has not yet fully materialized, in the long run, the stringent environmental regulatory environment is gradually squeezing the development space of the copper industry, especially the upward pressure on costs, which cannot be overlooked.

2. The structure of raw material supply is undergoing a transformation.

In recent years, nonferrous metal enterprises have achieved remarkable results in going global and participating in international cooperation, including Chinalco. Toromocho Copper mining project; China Minmetals Corporation Las Bambas Copper mining project; Zijin Mining Kamoa Project and Kolwezi Project: Luoyang Molybdenum Tenke Copper-cobalt projects, and especially... Las Bambas The copper mining project has enabled China Minmetals Corporation to successfully establish itself as one of China's largest copper producers and smoothly become one of the world’s top ten copper producers, truly achieving a transformation from a trader to an industrial operator.

According to the association’s preliminary estimates, the total capacity of copper mining projects in which Chinese enterprises currently hold equity interests through overseas investments or cooperative ventures exceeds... 180 Ten thousand tons—already nearing the production capacity of domestic copper mines. 2017 Annual copper production from overseas mines has also nearly reached the level of domestic copper mines. Additionally, the Mirador project of Tongling Nonferrous Metals is planned to... 2018 Year of production, Zijin Kamoa The project is also progressing according to plan (plan). 2020 With one production line going online annually, China’s raw material supply structure is shifting toward diversification.

3. The pace of industrial structure adjustment in processing industries is accelerating.

Copper processing, being a capital- and technology-intensive industry, is largely dominated by private enterprises. These enterprises not only face high financing costs but also encounter significant difficulties in securing funding. Moreover, due to their weak bargaining power along the upstream and downstream value chains and long payment terms for product sales, some small and medium-sized enterprises are burdened with high capital costs. This has, in turn, compelled processing companies to gradually withdraw from the copper-processing sector—especially after this year’s Xi’an cable incident, when orders have become increasingly concentrated among larger enterprises, accelerating the exit of smaller and medium-sized firms and speeding up the structural adjustment of the processing industry. In particular, the copper-tube industry has seen an even greater concentration of production capacity, essentially completing its reshuffling process, while the production capacity of copper rods and copper strips is increasingly trending toward centralization as well.

4. Consumption continues to maintain slow growth, but there are quite a few bright spots.

Although China’s overall copper consumption has slowed down in terms of growth rate, there are still many bright spots in the end-use sectors—such as the new energy sector. Although, according to the data, investment growth in power grid construction has noticeably decelerated in recent years. 2017 Year 1-11 Month-on-month, the completed investment in power generation projects by major national power generation enterprises. 2329 100 million yuan, down year-on-year 13.4% However, the proportion of investment completed in clean energy sources such as hydropower, nuclear power, and wind power as a share of total power-source investment increased compared to the previous year. 5.6 percentage points, reaching a share of 71.1% It can be seen that wind power, nuclear power, and photovoltaic power are emerging as the key growth drivers in the future power generation sector. Compared to coal-fired power plants, new-energy power plants have a significantly higher copper density. In addition to new-energy power generation, the development of new-energy vehicles will also boost copper consumption. Currently, new-energy vehicles have become a widely recognized consensus for the future development of the automotive industry. Moreover, the copper content in new-energy vehicles is more than double that of conventional cars—this figure does not even include the accompanying charging infrastructure. Furthermore, as consumer spending among residents continues to upgrade, copper consumption is set to rise. For example, this year, the production and sales of traditional end-use copper products such as air conditioners have performed exceptionally well. 2017 The year-on-year growth rate of cumulative sales of air conditioners and refrigerators reached 27.4% and 12.6% And this trend is expected to continue.

Outlook for the Situation

1 The global economy is expected to break free from its low-growth trajectory, creating favorable conditions for the copper market. From the perspective of the global economic environment, the world economy is... 2016 accelerated in the fourth quarter of the year, and this momentum continues... 2017 The year continues. According to 2017 Year 10 Moon IMF The World Economic Outlook report shows that the recovery in global economic activity continues to gain momentum. 2016 Global economic growth for the year 3.2% , the lowest level since the global financial crisis; and 2017 Global economic growth is expected to rise to... 3.6% , expected by 2018 Annual increase to 3.7% . And 2017 Year 4 Compared to the forecasts in the World Economic Outlook, 2017 Year and 2018 The annual growth forecasts have been revised upward, respectively. 0.1 percentage points. From the perspective of the domestic economy, China is currently still in a phase of... “ Three phases overlapping ” At this stage, downward pressure still persists, but the overall trend of China’s economic performance remains positive. In particular, the outcomes of supply-side structural reforms have begun to emerge, and positive changes are taking place in structural adjustments. Another point worth noting is... “ The Belt and Road ” The steady advancement will also boost economic development in countries along the route, thereby stimulating demand for related basic raw materials. Moreover, the external environment is gradually improving, which will provide stronger support for the copper market.

2 The industrial development landscape has been further optimized. Resource supply will adopt a diversified pattern. In addition to progress in overseas cooperation, domestic copper production in regions such as Tibet, Yunnan, and Xinjiang is expected to increase further. However, due to current environmental pressures, there are many uncertainties surrounding these developments. Nevertheless, as domestic copper consumption slows down and the supply of recycled copper within China rises, the country’s reliance on foreign copper resources will gradually ease. The layout of the smelting industry has become more dispersed, moving beyond the traditional regions of Jiangxi, Anhui, Shandong, Gansu, and Yunnan. 5 Outside the major smelting hubs, Fujian, Inner Mongolia, and Guangxi are poised to become new key provinces for copper smelting. Coastal regions and smelting enterprises endowed with abundant resources will enjoy even greater competitive advantages. The number of processing industry enterprises is declining, while their average size is increasing. Large enterprises are trending toward larger scale and internationalization, whereas small- and medium-sized enterprises are shifting toward specialization and niche markets. Competition in the processing sector is intensifying; small and medium-sized enterprises—especially those lacking sufficient financial resources and technological (including environmental protection) capabilities—will gradually be phased out, leading to a new landscape characterized by the strong becoming stronger and the weak becoming weaker.

3 Overall, the growth rate of copper demand in the market has slowed down, yet there are significant differences among various segments. Although downstream consumption continues to show promising highlights, it’s important to recognize that China’s base level of copper consumption is already very large, and its cumulative stock has nearly reached the levels seen in developed countries. Moreover, new areas of copper consumption are contributing only marginally to overall growth. As a result, future copper consumption will generally exhibit localized bright spots, but the overall growth rate of total demand will continue to slow down. The market will also become increasingly diversified: in the processing industry, future demand will fall into three distinct tiers—high, medium, and low. Medium- and low-end demand will grow slowly, while demand for high-end products will maintain rapid growth.

4 Under the new normal of environmental protection, green development will become the only path for the copper industry’s growth. 2017 Year 11 Moon 23 On [date], the Ministry of Environmental Protection announced at a press conference that, following approval from the Central Organization and Establishment Commission, the Ministry’s North China, East China, South China, Northwest China, Southwest China, and Northeast China Environmental Protection Inspection Centers have been reclassified from public institutions to administrative agencies dispatched by the Ministry of Environmental Protection and have officially been renamed. “ Inspectorate ”。 “ Inspectorate ” One of the major new functions is to take on tasks related to the central environmental inspection, further strengthening oversight of government actions. This also means that the central environmental inspection will become a regular practice. Meanwhile, with the implementation of regulations such as the “Environmental Protection Tax Law,” the revised “Water Pollution Prevention and Control Law,” and the “Reform Plan for the System of Compensation for Ecological and Environmental Damage,” it is foreseeable that... 2018 Environmental protection efforts will be further intensified this year, and green development will become the only viable path for the copper industry’s growth.