Hong Kong Stock Concept Tracking | The US "Big and Beautiful" bill triggers a sharp rise in copper prices, leading to a fierce copper scramble as global copper inventories run low (with concept stocks)

According to Zhitong Finance APP, on the afternoon of July 1st, international copper prices suddenly surged, with the comprehensive copper increase reaching over 1% at one point, and the highest copper price reaching USD 9,984; COMEX copper rose nearly 2%, while domestic Shanghai copper closed up 1.09%. Recently, Goldman Sachs also raised its LME copper price forecast for the second half of 2025 from the previous USD 9,140 per ton to USD 9,890 per ton, and expects it to peak at USD 10,050 per ton in August.

Analysts believe that the optimistic sentiment generated during the voting process of the "Big and Beautiful" bill in the United States may be the main reason for the copper surge. Currently, the vast majority of Republican senators in the U.S. strongly support the swift passage of the "Big and Beautiful" bill. On the other hand, the U.S. dollar index has plummeted, falling below the 97 mark, with a decline of over 10% in the first half of the year, marking the worst performance for the first half since 1973. Goldman Sachs currently expects the Federal Reserve to implement three rate cuts of 25 basis points each starting in September 2025, whereas the previous forecast was for only one rate cut in December. Medium to long-term U.S. dollar liquidity is expected to remain loose, which is favorable for non-ferrous metals.

From the supply side, on March 5th, Trump mentioned in a speech to Congress the imposition of a 25% tariff on copper. The expectation of tariffs has led downstream manufacturers to stock up in advance and engage in arbitrage trade, driving overseas copper to increasingly shift to the U.S. market. In the first half of the year, LME copper inventory in Asian warehouses sharply decreased from 200,000 tons to 60,000 tons, a reduction of 70%. LME European inventory dropped by 44% in June, approaching multi-year lows for the same period. Traders are frantically transporting copper, leading to a global copper inventory crisis and stimulating a surge in copper prices.

From the demand side, China is a major copper consumer, accounting for about 50% of global consumption. In particular, the scale of investment in power grids is large and growing year by year, making it one of the key factors determining the increase in copper demand. China's PMI data for June has continuously rebounded, indicating stable domestic and external demand, with increased fiscal spending driving a recovery in infrastructure, further supporting copper prices. Additionally, with the rising penetration rate of new energy vehicles, this sector is expected to become one of the main industries driving copper consumption growth in the future.

Guangfa Securities stated that copper, as an energy metal, has long-term sustained growth in downstream demand such as electricity and new energy vehicles, while global long-term low capital expenditure in copper mining suppresses incremental production. The decline in grades of old mines and rising geopolitical risks make it difficult to maintain stable production. The growth rate of global copper mine production is nearing a turning point from 2025 to 2027. With the Federal Reserve's rate cuts and China's efforts to stabilize domestic demand, the inventory cycle is expected to continue rising, and attention should be paid to the elasticity of copper prices.

Related concept stocks:

CMOC (03993): In 2024, the company plans to produce 650,200 tons of copper, a year-on-year increase of 55%, marking its first entry into the top ten copper producers globally. The production and sales volume of copper and its price have a significant impact on the company's operating performance. In 2025, the company plans to produce between 600,000 tons and 660,000 tons of copper. CMOC has initiated a new round of expansion plans: the TFM West project and the KFM Phase II project are undergoing preliminary exploration work to support the goal of producing 800,000 to 1,000,000 tons of copper by 2028. Tianfeng Securities believes that the company has significant growth potential in the medium to long term.

ZIJIN MINING (02899): As of the end of 2024, the confirmed and credible reserves of copper amount to 50.4321 million tons. The copper production is expected to be 1.07 million tons in 2024, with a planned production of 1.15 million tons in 2025 The company has multiple copper mine projects globally and continuously increases its copper resource reserves through mergers and acquisitions.

MMG (01208): The company is a medium to large-sized non-ferrous metal mining company, primarily engaged in the exploration and development of overseas copper, zinc, and other metal mines. It serves as the overseas resource integration platform for the China Minmetals Corporation. In 2024, the copper equity output is expected to reach 265,000 tons, ranking third among domestic listed companies, only behind Zijin Mining and CMOC.

Jiangxi Copper Co., Ltd. (00358): As the world's largest single copper smelter, it is expected to produce 2.2919 million tons of cathode copper in 2024 (up 9.28% year-on-year), 118.26 tons of gold (up 4.99%), and 6.0412 million tons of sulfuric acid (up 1.4%). In 2025, it plans to produce 2.37 million tons of cathode copper, 139 tons of gold, and increase the production capacity of sulfuric acid and copper processing materials