On the banks of Shanghai's Huangpu River from October 20-22, the 2026 Sustainable Global Leaders Conference returns once again. Nobel laureates and Turing Award winners will share their visions of technology's future and trends, and the internet-famous professor who "rescues" people from anxiety and the rat race era—Michael McFarlane—will hold a live dialogue with Xiang Biao!
Limited spots available, first come first served. Let us embark on this journey toward sustainability together! [Click to Register] China Securities Research. By Zhou Junzhi, Chen Yi. The single largest determinant of the copper price center is supply. The latter half of every supply cycle corresponds to the completion of a step-up in the copper price center. Only the supply cycle contains the truly great opportunities in copper prices.
History also tells us that to capture the turning point of the copper price center, beyond supply, three other factors must be watched: ① inventories and idle capacity buffers declining; ② the emergence of new demand that is insensitive to high prices; ③ the next round of copper mining requiring higher capital investment and incentive prices. Understanding this round's strong copper price performance (2021 to present) through this lens, the above conditions are precisely met.
Therefore, copper prices have already completed a step-up in their center. The weakness of traditional demand was once mistaken as a potential risk for copper prices to fall, but in fact traditional demand is weak, new demand has not yet sufficiently replaced it, and a new round of copper mine supply expansion on a large scale is difficult—which has created the current low-elasticity copper mine supply phase, and this is precisely the root cause of this round's copper price decoupling. Future copper prices may fluctuate, but the new center is set.
Traditional copper price analysis often starts from global manufacturing, real estate, or inventory cycles. This framework can explain short-cycle fluctuations in copper prices (3-5 years), but it struggles to explain a more important question: why do the same demand growth rates correspond to completely different copper price levels in different periods? We attempt to examine, from a longer-span mine capital expenditure-capacity cycle, the impact of supply curve changes on the copper price center, and thereby explain why this round of copper prices has surpassed the traditional demand cycle and exhibited extremely strong price performance.
Four Supply Cycles Since WWII, with Copper Prices Oscillating Around a Moving Center
Observing copper mine growth rates since 1900, the global copper mine output growth rate from 1900-1950 was far more volatile than after 1950. After WWII, copper mine development further shifted from high-grade ore bodies gradually toward large low-grade porphyry copper deposits, and capital deepening changed the supply response mechanism.
Thus, we choose 1950 as the starting point for studying modern copper mine supply cycles, not simply to avoid the more volatile supply fluctuations before that, but because mine copper growth rates before and after 1950 carry different economic meanings: before, they more reflected short-cycle quantity adjustments caused by wars, depressions, and the opening and closing of existing capacity; afterward, with large-scale mine capital deepening and the diffusion of global resource centers, mine copper growth rates increasingly became the lagged result of the previous round's price and capital expenditure decisions.
Using the compound growth rate of global mine copper output to measure the intensity of supply release, four rounds of global copper mine supply release cycles can be observed from the 1950s to the present. Historically, when the 5-year CAGR continues to rise above 4%-5% and repeatedly reaches or exceeds 5% within a phase, it usually corresponds to large projects formed by the previous round of capital expenditure entering a concentrated delivery period, which we define as the "strong supply release phase"; when the 5-year CAGR continues to fall from a high level and enters around 2%, it means the earlier project pipeline is gradually being depleted and supply re-enters a low-elasticity state.
The first supply cycle was 1955-1968 (14 years), of which 1955-1964 (10 years) was the strong supply release phase, with mine output CAGR reaching 4.9%; 1965-1968 (4 years) was the weak supply phase, with mine output CAGR falling back to 1.7%. The second supply cycle was 1969-1994 (25 years), of which 1969-1974 (5 years) was the strong supply release phase, with mine output CAGR reaching 4.5%; 1975-1994 (20 years) was the weak supply phase, with mine output CAGR falling back to 1.8%. The third supply cycle was 1995-2011 (17 years), of which 1995-2001 (7 years) was the strong supply release phase, with mine output CAGR reaching 5.2%; 2002-2011 (10 years) was the weak supply phase, with mine output CAGR falling back to 1.9%. The fourth supply cycle has been 2012-present (15+ years), of which 2012-2016 (5 years) was the strong supply release phase, with mine output CAGR reaching 5.2%; 2017-2026F (9 years) shifted to weak supply, with mine output CAGR falling back to 1.8%.
Corresponding to price performance, long-term copper price behavior does not oscillate repeatedly around a fixed mean, but rather exhibits the characteristic of continuously departing from old plateaus and forming new price ranges as supply cycles switch. We further decompose, through detailed review, why after each strong supply release ends, the next round of copper prices often does not simply return to the original mean but enters a higher plateau.
First Supply Cycle: Policy-Driven Large-Scale Development of Traditional Resources (1955-1964)
The first strong supply release was not purely driven by market prices. The U.S. government actively reduced investment and sales risks in copper resource development through strategic reserves, financing support, and procurement guarantees. The Korean War and early Cold War industrial mobilization further strengthened America's strategic resource security demands. The 1946 Strategic and Critical Materials Stock Piling Act established reserve targets and a government procurement framework; the 1950 Defense Production Act further supported expanding or maintaining capacity at producing, idled, and marginal mines through government loans, long-term procurement contracts, and tax amortization incentives. Together, these two policies transformed national security needs into investment conditions for mine projects.
The copper mine development model for new supply in 1955-1964 still mainly focused on expansion, reopening, and development of known ore bodies within traditional mining districts. Regionally, three major incremental centers formed: the Central-Southern African Copperbelt, North American mining districts, and the Chile-Peru Andean copper belt. The Soviet Union and Eastern Europe were also important incremental sources during the same period. Global copper mine output increased from 2.9 million tonnes in 1955 to 4.443 million tonnes in 1964, a cumulative increase of about 1.54 million tonnes.
North America was the region most directly supported by U.S. policy, with policy support directly acting on domestic marginal mines and low-grade ore bodies. Increments outside North America mainly came from the Zambia-Congo Copperbelt and large projects in Chile and Peru promoted by Western mining capital. The Soviet Union and Eastern Europe were also important expansion centers. From 1955-1964, the Soviet Union and Eastern Europe contributed about 384,000 tonnes, representing independent expansion under the socialist industrialization system.
Supply release first depressed prices, and the price decline in 1957-1958 was highly consistent with the first round of capacity release. The supply dividend was absorbed by demand, and the pricing center for copper prices gradually shifted from new capacity to marginal supply disruptions, with the price center moving upward. In 1964, as postwar industrialization continued, earlier capacity was gradually absorbed, copper prices regained conditions for rising, and the cycle turning point arrived. Global mine copper output increased from 4.443 million tonnes in 1964 to 5.01 million tonnes in 1968, with a CAGR of about 3%, slowing from 5.3% in 1955-1964; declining supply growth and rising production costs limited further copper price declines.
After the supply cycle shifted from strong to weak, the pricing focus of copper prices gradually turned to marginal supply disruptions. Strikes and transportation risks amplified the impact on effective supply from local events into market gaps, while high copper prices themselves reinforced labor-capital distribution demands and resource nationalism. The median nominal price from 1965 to 1974 was about $1,090/tonne, significantly higher than $683/tonne from 1955 to 1964.
Second Supply Cycle: High Prices Drive Global Resource Expansion (1969-1974)
The second round of supply expansion was driven jointly by high prices and resource security: after idle supply formed in the first round was absorbed by industrialization demand, inventory buffers declined, and the market began paying higher premiums for new resources and supply interruptions. In the latter half of the 1960s, demand from power grids, automobiles, construction, home appliances, and industrial equipment continued, and earlier surpluses rapidly converged.
U.S. strategic copper reserves fell from about 1.036 million tonnes at end-1963 to about 250,000 tonnes in 1967, significantly reducing the supply buffer available to consuming countries. After the 1971 "Nixon Shock," the Bretton Woods system began to substantively unravel and formally ended in 1973 when major currencies shifted to floating exchange rates. At that time, dollar depreciation, inflation, and the financialization premium on physical asset inventories were also important backgrounds for understanding asset pricing.
New supply from 1969-1974 further shifted toward global greenfield, low-grade, and large-tonnage resources. Regionally, resource boundaries expanded from traditional mining districts such as the southwestern United States further to Canada, the Andes, Southeast Asia, Africa, and Oceania, requiring integrated construction of mines, concentrators, smelters, energy, and transportation systems. Global mine copper output increased from 5.682 million tonnes in 1969 to 7.097 million tonnes in 1974, a five-year increment of about 1.415 million tonnes.
Western Canada and new Pacific Rim mining districts were the core increments for market economies. Chile (Andes) and Zaire (now DRC) provided expansion increments from traditional producing areas. Non-market economies such as the Soviet Union and Poland also contributed significantly. The Soviet Union and Poland together contributed about 310,000 tonnes of net increase, with Soviet mine output rising by 171,000 tonnes and Poland by 139,000 tonnes. Compared with 1955-1964, the copper mine development model from 1967-1974 shifted further from expansion, reopening, and known ore body development within traditional mining districts toward global greenfield, low-grade, and large-tonnage resources, and the supply cycle ended later than the price cycle.
Inflation and monetary factors pushed up nominal prices. 1969-1974 was the only phase among the four strong supply release phases in which copper prices rose significantly at the same time. 1973-1974 was not an independent copper market move, but a joint rise in global commodity prices: after the Bretton Woods system collapsed and the dollar depreciated, demand for inflation hedging through physical assets rose. The World Bank later explicitly pointed out that copper prices continued to rise in early 1974 despite a clear increase in production, reflecting the influence of market expectations and speculative forces.
Two demand recessions (1975, 1982) extended the inventory digestion cycle, and the price center was delayed in moving up. After 1987, the triple buffers of inventories, idle capacity, and new projects weakened simultaneously, and the price center truly moved up. After supply growth weakened in 1974, copper prices did not immediately begin a trend rise, but a new nominal price floor had already been confirmed. Global mine copper output increased from 7.097 million tonnes in 1974 to 8.319 million tonnes in 1986, with a CAGR of only about 1.3%, significantly slowing from 5.9% in 1969-1974; declining supply growth and rising production costs limited further copper price declines.
However, the two demand recessions in 1975 and 1982 delayed inventory destocking successively, and copper prices oscillated near the new floor for a long time. By the end of 1986, inventories had fallen to less than half of the 1983 peak. In 1987, global commercial inventories further fell from about 890,000 tonnes to 520,000 tonnes;同期 copper consumption was about 10.44 million tonnes, higher than production of about 10.21 million tonnes, and the market shifted from inventory surplus to a physical deficit.
The average nominal copper price from 1987-1990 was about $2,474/tonne, about 71% higher than $1,448/tonne from 1982-1986, and stabilized around $2,450-$2,550 in 1991-1992. Only then was the new nominal price center confirmed.
Third Supply Cycle: Chile-Led Expansion and the SX-EW Pathway
The third round was a strong capacity delivery period formed jointly by globalization, resource opening, and technological diffusion. Project reserves formed from the late 1980s to the mid-1990s were concentrated into production, expansion, and ramp-up in 1995-2001. In the 1990s, electronics, power, construction, and manufacturing supply chains shifted to East Asia, and Asia gradually became an important region for global refined copper consumption. By the late 1990s, Asia had absorbed one-third of global refined copper consumption, and demand expectations underwent a structural change.
Chile's mining opening and global capital flows laid the institutional foundation for this round of expansion. This round of new supply was dominated by large Chilean porphyry mines and supplemented by large projects in Australia, Indonesia, Argentina, and Peru; SX-EW brought oxide ores, low-grade ores, and waste rock into the set of economically developable resources. Global mine copper output increased from 10.07 million tonnes in 1995 to 13.636 million tonnes in 2001, a six-year increment of about 3.566 million tonnes and a CAGR of about 5.2%, the largest concentrated release after the previous two rounds.
The southern Andes in South America was the absolute core, with Chile alone contributing about 60% of global net increment. At the project level, SX-EW reduced some projects' dependence on traditional smelting-refining links, allowing oxide ore and waste rock leaching resources to directly produce cathode copper and shortening some project processes. However, its significance mainly lies in expanding the resource boundary and does not mean that all projects necessarily have lower unit capital and operating costs.
After 2001, the contraction of the supply project pipeline and the acceleration of Chinese demand overlapped in 2002-2011, shifting the copper market from "overcapacity and price suppression" to "low supply elasticity and price center revaluation." After the previous round of concentrated commissioning ended, global copper mine supply did not immediately stop growing, but its growth rate fell markedly. Low copper prices in 1997-2001 compressed exploration budgets and greenfield project investment, and some high-cost projects were delayed or cancelled. Because large copper mines typically require years from exploration, approval, and financing to construction and commissioning, the project gap formed during the low-price period gradually translated into insufficient new supply from around 2003.
Global mine copper output increased from about 13.6 million tonnes in 2002 to about 16.1 million tonnes in 2011, with a CAGR of about 1.9%, significantly lower than the 5.2% compound growth rate of 1995-2001. Over the same period, global refined copper usage increased from about 15.3 million tonnes to 19.9 million tonnes, with a CAGR of about 3.0%, and China became the core of this round of demand growth. After joining the WTO, export manufacturing, home appliances, machinery, and electronics industries expanded rapidly; at the same time, urbanization, housing construction, power grid investment, and transportation infrastructure significantly increased the copper consumption intensity per unit of economic growth.
The median copper price from 2002-2011 was about $5,936/tonne, up about 227% from about $1,814/tonne in 1995-2001, roughly three times the previous phase.
Fourth Supply Cycle: Super-Cycle CAPEX (2012-2016)
The fourth round of strong supply release was the historic-level capital expenditure triggered by the 2002-2011 copper price rise and China's demand shock, concentrated in delivery during 2012-2016. China's own copper mine resources and mine output could not simultaneously meet demand, and new consumption increasingly relied on imports of overseas mines, copper concentrate, refined copper, and scrap copper. By around 2011, China's copper consumption accounted for about 40% of the world total, and its refined copper imports were equivalent to about 40% of global refined copper trade.
Over the same period, China's investment as a share of GDP rose from 35% in 1980 to 49% in 2010, with infrastructure and manufacturing accounting for about 27% and 31% of fixed asset investment respectively, and residential investment as a share of GDP rising from about 5.5% in 2004 to about 9% in 2011. As a result, mining companies no longer viewed Chinese demand as an ordinary cyclical recovery, but incorporated it into long-term demand forecasts and accordingly raised copper price assumptions and market capacity expectations over project lifetimes.
Driven jointly by demand expectations, copper prices, and financing conditions, global copper mine development capital expenditure reached historic highs. This round of global supply was more geographically dispersed, with the absolute increment the largest among the four rounds, but in terms of resource type it still relied heavily on large sulfide mines and the copper concentrate system, becoming more complex in capital and execution. At the regional level, Peru became the largest project-based incremental center, Mongolia formed a new large resource center, Mexico and the United States contributed increments through brownfield expansion, the African Copperbelt provided supplementation, and Chile's new projects were mainly used to hedge the decline of mature mines.
After the supply peak was digested after 2017, the greenfield project gap and structural demand relay pushed the price floor up again. After 2017, new projects did not completely disappear, but were more often scattered commissioning and long ramp-ups of a few projects, without forming the concentrated supply release seen in 2012-2016. Brownfield expansion took priority over greenfield development, and miners placed greater emphasis on balance sheet repair and maintenance of existing mines during the low-price phase; at the same time, declining mine grades, rising equipment and energy costs, and longer permitting, environmental, and community consultation cycles made it harder for high prices to quickly translate into new effective supply. Global mine copper output CAGR fell to about 1.1% in 2017-2020, down about 4.1 percentage points from 2012-2016.
The nominal copper price center in 2017-2020 was about $6,221/tonne, and prices gradually bottomed, but even the low nominal price percentile did not return to the lows before 2016. After 2020, structural demand took over and continued to call on high-cost resources. In 2021-2025, power grid investment, transportation electrification, renewable energy, and digital infrastructure gradually became new sources of marginal demand. Compared with real estate and general manufacturing, these demands have stronger planning attributes and lower short-term price elasticity. The average nominal copper price in 2021-2025 further rose to about $9,145/tonne, up about 47% from 2017-2020 and about 33% higher than 2012-2016. This indicates that prices may have already departed from the 2017-2020 plateau and entered a new higher range.
Assessing Whether This Round of Copper Prices Has the Conditions for a Price Center Step-Up
The four cycles show that only when the previous round's low-cost supply expansion is gradually absorbed, while demand still requires continuous calls on new resources, do copper prices have the basis to depart from the old plateau. Therefore, falling supply growth is an important clue for observing price revaluation, but it cannot alone constitute a sufficient condition for a copper price center step-up. Judging this change requires simultaneous examination of supply buffers, demand sustainability, and marginal development costs.
Condition one: the buffer formed by earlier supply expansion is gradually depleted, high prices cannot quickly bring sufficient new output, and effective supply elasticity declines. After large projects are concentrated into production, a decline in mine copper growth usually means the release momentum of the earlier project pipeline weakens. In this context, strikes, transportation disruptions, and resource policy changes are more likely to amplify price volatility; only if such disruptions further delay investment or raise project return requirements can their impact shift from a short-term risk premium to a long-term supply cost. In addition, although strong supply release often suppresses copper price performance, considering monetary and inflation factors, nominal copper prices do not necessarily fall. The 1969-1974 experience shows that changes in the nominal copper price center must also take into account shocks to monetary credit in extreme cases.
Condition two: a sharp slowdown in demand may delay the pace of center step-up, and there must be marginal demand that continues to grow and has low price elasticity. Demand must be able to continuously absorb supply, not merely form short-term restocking. The experience from after 1974 to the mid-1980s shows that slower supply does not necessarily bring an immediate step-up in the price center. Economic recession, demand adjustment, and inventory digestion can keep the market loose for a long period. The change after 2002 was that China's industrialization and urbanization formed sustained new demand, gradually absorbing previously expanded capacity.
Condition three: the marginal resources needed to meet new demand require higher development costs and capital returns. Technological progress and new resource centers can only suppress marginal supply prices if they continuously form low-cost increments of sufficient scale. Chile's large mines and SX-EW expansion in the 1990s did increase supply and improve the development economics of some resources, but did not permanently prevent the subsequent copper price center step-up. As new output is absorbed, the market still needs to develop the next batch of resources.
The core change after 2021 is that the supply slowdown after the concentrated delivery of super-cycle projects gradually overlaps with demand growth brought by power system and electrification investment. Supply-side constraints are mainly reflected in the rising difficulty of converting resources into effective output, and the global mine side has not re-formed a strong supply cycle of about 5% sustained growth. On the demand side, weaker real estate does not necessarily mean total copper demand contracts in tandem, as structural demand relay already has a physical investment foundation. Power grid construction, transportation electrification, and energy system investment provide demand sources different from the traditional real estate cycle. In its 2025 report, the IEA noted that China's power grid investment expansion was the largest single contributor to global copper demand growth over the previous two years. This means the demand relay already has a physical investment foundation, rather than relying entirely on long-term narratives.
2017 was the point when the necessary conditions for a copper price center step-up began to form, and after 2021 was the stage when sufficient evidence strengthened markedly. Weaker supply explains why prices struggle to return to old lows, structural demand determines whether prices can depart from the old plateau, and higher marginal incentive costs determine the height and sustainability of the new price plateau.
The sustainability of the consumption recovery remains uncertain. Whether it will continue to oscillate at low levels in the future or continue moving toward normalized growth still requires close tracking. If consumption remains persistently weak, the momentum for economic recovery will be limited. Whether the real estate industry can continue to improve also remains uncertain. This downcycle in real estate has already lasted a long time, and although a brief warming trend has recently appeared, many indicators are still in negative growth, and whether the warming can be sustained still needs observation. Due to data availability, there is a risk of incomplete statistics, as well as risks of measurement error caused by model failure and data statistical error. The impact of tightening monetary policy in Europe and the United States may exceed expectations, dragging down global economic growth and asset price performance. Geopolitical conflicts remain uncertain, disturbing the global economic growth outlook and market risk appetite.