Recently, copper prices have continuously hit record highs. The three-month copper price on the London Metal Exchange once exceeded US$14,800/ton, a record high; the main domestic Shanghai copper contract also stood at the 110,000 yuan/ton mark. Although the price subsequently retreated quickly, the overall price is still operating in a high range.
As the market continues to be hot, profit distribution in the copper industry chain is seriously unbalanced: upstream mining companies that hold resources enjoy the dividends of rising volume and price, and their profits have increased significantly; however, the midstream smelting and processing link continues to be under pressure, with spot processing fees for copper concentrate falling into the negative range, and companies paying back costs to organize production. The polarization in the same industry and the same market situation is essentially a structural dilemma of the low-end processing model.
Copper is an important metal that supports the iteration of new energy, the implementation of computing infrastructure, and the upgrading of high-end equipment. It is an indispensable basic material for advanced manufacturing. After years of development, my country has built the world's largest copper smelting and processing industrial system, with production capacity and output ranking first in the world, and its industrial size advantage is very prominent. However, large scale does not mean strong industry, and the size advantage has not been fully transformed into competitive advantage.
The profit and loss differentiation of the industrial chain is on the surface a cyclical phenomenon caused by the mismatch between short-term supply and demand, and the root cause is the industry's long-term solidified extensive development path. Currently, the global supply of copper mines has entered a rigid contraction cycle. The grades of overseas core mines continue to decline and production disturbances occur frequently. The development cycle of new mines is long, and it is difficult for new production capacity to match the incremental demand brought by global emerging industries. However, my country's dependence on foreign copper concentrates is as high as 80%, smelting capacity continues to expand, and the scale of existing production capacity is huge, forming a typical industrial pattern of "less mines and more furnaces". Most companies have stayed in the primary processing link for a long time, relying on fixed processing fees to maintain revenue, and falling into a vicious cycle of "the greater the production capacity, the heavier the involution, and the thinner the profits." This development model, which emphasizes scale expansion but neglects value enhancement, emphasizes primary processing and neglects technological innovation, can still be maintained during the stable cycle of the industry. However, it is no longer sustainable at a time when resources continue to be tightly balanced and high-end competition in global industries intensifies.
To transform the industry and improve quality, we must first correct the inertia of production capacity expansion and lay a solid foundation for resource security. On the one hand, we strictly adhere to the red lines for industrial access, strictly control new smelting capacity, clean up inefficient and illegal production capacity in an orderly manner, optimize the structure of existing production capacity, and resolutely curb the disorderly expansion of low-end production capacity. On the other hand, we will build a multi-resilient resource guarantee system, increase domestic deep prospecting and efficient development of low-grade copper mines, and steadily expand the diversified layout of overseas equity mines. At the same time, the "urban mine" value of recycled copper will be activated, the waste copper recycling, purification and high-end utilization system will be improved to form a complementary and symbiotic supply pattern of primary smelting and recycling.
Technological innovation is an important starting point to solve the low-end dilemma and increase the value of the industry. In recent years, domestic industry, academia and research institutes have collaborated to tackle key problems and achieved a number of technological breakthroughs, providing strong support for the high-end transformation of the industry. The high-end heat-resistant fine-grained copper sheets and strips developed by China Nonferrous Metals Technology Co., Ltd. have filled the domestic gap and enabled batch exports; China Nonferrous Metals Zhengrui (Shandong) Copper Co., Ltd. has conquered the core technology of ultra-thin copper foil precision manufacturing, broken the long-term overseas monopoly, and realized the localization of high-end electronic copper foil; Tongling Nonferrous Metals Group Co., Ltd. has successfully mass-produced 6N-grade high-purity copper, and 7N-grade ultra-high-purity copper technology has been steadily iterated, and continues to fill in the shortcomings of high-end copper-based materials. These practices fully prove that only by deeply cultivating the high-end materials track can we get rid of the "involution" of low prices and expand the space for industrial growth.
To deeply tap the value potential of the industrial chain, we need to comprehensively improve the level of comprehensive utilization of resources. Relying on mature smelting processes and technology accumulation, we will comprehensively activate smelting associated resources and deeply explore the hidden value of the industrial chain. With the rapid rise of AI computing power and high-end electronics industry, the scraps and ancillary products of the past smelting have become core new materials supporting high-end manufacturing, and their value has doubled. From single smelting and processing to efficient utilization of all elements, it is the key path for the copper industry to reconstruct its profit system.
The current competition in the global copper industry has long bid farewell to a single production capacity competition, turning to an all-round competition in technology, materials, and value chains. my country's copper industry must take the initiative to get rid of its dependence on low-end processing paths, promote the upgrading of the industry with strong resource base, technological empowerment, and value reshaping, accelerate the leap from "volume leadership" to "quality leadership", and build solid material support for the high-quality development of strategic emerging industries such as new energy and high-end manufacturing. (Author: Tao Yu)
