Copper prices have recently hovered above the RMB 100,000 per ton threshold, with market sentiment appearing increasingly conflicted. Beneath the surface, however, the underlying market logic has quietly shifted. Traditional demand-driven narratives — whether linked to the drag from the property sector or support from infrastructure spending — have already been largely priced in.

The market’s real focus is now moving away from macroeconomic demand expectations toward a more concrete and challenging supply-side constraint: a global “sulphur shortage” triggered by geopolitical tensions in the Middle East, which is reshaping the cost structure and output curve of the global copper supply chain.

I. Pricing Logic Shifts: Supply Bottlenecks Replace Demand Narratives

Over the past two years, copper price fluctuations were primarily driven by expectations surrounding the global macroeconomy. However, with the persistence of the US Federal Reserve’s high-interest-rate environment and continued weakness in China’s traditional demand sectors, the marginal impact of these factors on prices has weakened significantly.

The market urgently needed a new and sufficiently powerful catalyst to break the stalemate.

That new variable is sulphur.

Around one-quarter of the world’s sulphur supply originates from the Middle East, while roughly half of global seaborne sulphur trade passes through the Strait of Hormuz. Since geopolitical tensions escalated earlier this year, disruptions along this critical energy and resource corridor have sharply tightened global sulphur supply, sending prices repeatedly to record highs.

As the key feedstock for sulphuric acid production, sulphur shortages have rapidly filtered downstream, evolving into a global “sulphuric acid crisis”.

This development has become a new pricing anchor because it directly strikes at the core vulnerability of the modern copper smelting industry.

II. The “Chemical Constraint”: The Achilles’ Heel of Hydrometallurgical Copper Production

Modern copper production mainly relies on two processing routes: pyrometallurgy and hydrometallurgy (SX-EW, solvent extraction-electrowinning). The latter, due to its lower costs and shorter processing chain, now accounts for approximately 20% of global refined copper output and forms the backbone of production capacity in resource-rich nations such as Chile and the Democratic Republic of Congo (DRC).

However, the hydrometallurgical process is entirely dependent on one critical reagent — sulphuric acid. Producing one ton of cathode copper requires approximately 3.5 tons of sulphuric acid.

Today, this lifeline is being squeezed by two simultaneous forces:

1.    Supply disruptions at the source
Conflict in the Middle East has sharply reduced sulphur exports, severely affecting SX-EW copper operations in regions such as the DRC that rely heavily on imported supply. Estimates suggest that if shortages persist, more than one million tons of the country’s hydrometallurgical copper output could be affected.

2.    China’s export restrictions
To prioritize feedstock supply for domestic strategic industries such as new energy battery materials and phosphate fertilizers, China suspended sulphuric acid exports starting in May. For Chile, which imports more than one million tons of sulphuric acid from China annually, the move represents a severe supply shock and could potentially reduce the country’s SX-EW copper output by hundreds of thousands of tons.

This type of supply restriction caused by shortages of industrial chemicals can be described as a “chemical constraint”.

Unlike traditional “resource constraints” such as declining ore grades or mine depletion, chemical constraints transmit much faster and have a more direct impact. They fundamentally challenge the long-held market assumption that higher copper prices can quickly stimulate idle production capacity back online. Without sulphuric acid, even sharply higher copper prices cannot be converted into actual production.

III. New Energy’s Dual Role: Both Growth Engine and Constraint

The new energy sector plays a highly contradictory role in the current market environment.

On one hand, it remains the strongest engine driving copper demand growth. Electric vehicles, solar power, energy storage systems, and power grid investments consume multiple times more copper than traditional industries, providing a solid long-term foundation for copper consumption growth.

On the other hand, the new energy industry itself has become both a participant in and victim of the “sulphur battle”.

Whether for High Pressure Acid Leach (HPAL) nickel-cobalt feedstock production used in ternary lithium batteries or for lithium iron phosphate (LFP) battery manufacturing, enormous quantities of sulphuric acid are required. This means the new energy industry is not only competing directly with hydrometallurgical copper producers for limited sulphur resources, but is also facing the risk of margin compression and potential output cuts due to surging input costs.

As a result, the current market dynamic combines both “demand pull” and “supply backlash”. Over the long term, the demand growth generated by the energy transition remains irreplaceable. In the short term, however, fierce competition for upstream sulphur resources between the new energy sector and the copper industry is further intensifying supply-side tightness.

IV. Market Outlook: Structural Bull Market Amid High-Level Volatility

Overall, the copper market is approaching a critical inflection point.

Strong downside support:
Production cut expectations for global SX-EW copper operations caused by the sulphur shortage are providing a solid floor for copper prices. As long as Middle East tensions remain unresolved, this hard supply-side constraint is likely to persist.

Upside pressure remains:
High global interest rates and weak demand from traditional sectors continue to cap upside potential. Meanwhile, China’s sulphuric acid export restrictions have caused domestic acid prices to decline, weakening Chinese smelters’ ability to offset copper production losses through by-product revenues. This could eventually trigger additional production cuts due to deteriorating profitability, leading to another round of supply tightening.

According to CCMN analysis, bearish and bullish factors are likely to remain intertwined in the near term, meaning copper prices may continue to fluctuate widely at elevated levels.

From a medium- to long-term perspective, however, the global copper market is gradually shifting from a tight supply-demand balance toward a clear supply deficit. As supply elasticity becomes increasingly constrained by “chemical constraints”, any stronger-than-expected demand growth from the new energy sector could trigger a new structural bull market in copper.

Source：Changjiang Nonferrous Metals Network