Amid the ongoing tug-of-war between strong macroeconomic expectations and weaker industrial fundamentals, Shanghai copper prices have recently maintained a high and volatile range. The most active contract has been fluctuating between RMB 100,000 and RMB 104,000 per ton.
Refined Copper Output Expected to Rebound in March
Chile’s copper production fell 3% year-on-year in January to 414,000 tons, marking a relatively weak start to the year. However, the Chilean Mining Association expects the country’s copper output to reach 5.5–5.7 million tons in 2026. Meanwhile, Chile’s Copper Commission has raised its average copper price forecast for 2026 to USD 4.95 per pound.
In contrast, Peru recorded strong production performance, with copper concentrate output in January reaching 115.1% of its monthly target, the highest level for the same period on record. According to the International Copper Study Group (ICSG), global copper mine production is expected to grow by 2.3% in 2026 to 23.86 million tons. Although additional supply will mainly come from higher production in Chile and Peru and new mining projects, the increase will be partially offset by declining ore grades at aging mines.
Overall, the global copper concentrate market is expected to remain tight in 2026, providing strong support for copper prices.
Domestically, China’s refined copper production experienced a seasonal decline in February. Data from SMM shows that output totaled 1.1424 million tons, down 3.13% month-on-month but still up 7.96% year-on-year. The operating rate stood at 83.94%, down 2.53 percentage points from the previous month.
Entering March, with production resuming and downstream demand gradually recovering, China’s refined copper output is expected to increase significantly. SMM forecasts that March production will rise by 52,800 tons month-on-month to 1.1952 million tons, representing a 4.62% increase and a 6.51% year-on-year gain.
The expected growth is driven by three main factors: the normalization of production activities, limited impact from maintenance despite scheduled overhauls at two smelters, and ramp-ups at newly commissioned projects. For example, Southeast Copper completed 38,000 tons of production in February and is pushing to achieve a strong first-quarter performance.
Global Visible Copper Inventories Reach Five-Year High
As of February 27, visible copper inventories across the three major global exchanges totaled 1.1909 million tons, the highest level in nearly five years and an increase of 446,800 tons compared with the start of the year.
COMEX copper inventories have edged slightly lower from recent highs, while LME inventories have continued to rise, indicating ongoing cross-market arbitrage and inventory transfers.
Since the Chinese New Year holiday, domestic refined copper social inventories in China have increased beyond expectations. As of March 2, inventories reached 574,000 tons, up 206,400 tons from pre-holiday levels and also marking a five-year high.
Affected by concentrated post-holiday arrivals and delayed logistics, the current inventory build may continue until mid-March, with the peak possibly exceeding 600,000 tons.
In the short term, recovering downstream demand remains insufficient to absorb the elevated inventory levels, which will act as a key constraint on further copper price increases. However, the pace of inventory accumulation is expected to slow. Limited import inflows and potential export plans by some smelters could ease domestic supply pressure, while full resumption of downstream operations may gradually boost consumption.
Faster Release of Downstream Orders
Feedback from across the copper value chain suggests that the recovery in end-user demand is gradually being transmitted to processing sectors. SMM data shows that the operating rate of Chinese copper wire and cable enterprises reached 27.72% by the end of February, up 12.52 percentage points from the previous month.
Orders related to the power sector remain relatively strong, while demand from construction and telecommunications sectors is comparatively weaker. With companies fully resuming operations after the Lantern Festival, the pace of order releases is expected to accelerate, pushing operating rates above 58.36%.
Market Outlook
On the macro front, China has entered a new policy window period with stronger expectations for economic stabilization and growth. Strategies focusing on expanding domestic demand are expected to provide long-term support for base metals consumption, including copper.
Fundamentally, bullish and bearish factors are intertwined. On the one hand, geopolitical risks have pushed crude oil prices higher, reinforcing cost support for copper. On the other hand, copper concentrate treatment charges (TCs) remain negative, reflecting ongoing tightness in raw material supply.
Although downstream sectors have resumed operations and market confidence is gradually improving, high inventories are likely to continue weighing on copper prices in the near term.
Overall, the copper market is expected to remain influenced by the ongoing contest between macroeconomic expectations and industrial realities. Shanghai copper prices are likely to maintain a volatile but relatively strong trend in the short term.
The key variables to watch will be the timing of an inventory turning point and the pace of downstream recovery. If inventories begin to decline in mid-to-late March, copper prices may enter a new upward cycle.
Source：CNMN