As industries such as artificial intelligence (AI) data centers, power grids, and electric vehicles rapidly expand, the demand for copper has soared, driving up prices. However, South Korean copper smelters remain pessimistic as China, the largest consumer and producer of copper, intensifies efforts to export its accumulated reserves. With China flooding overseas markets with discounted products like steel, aluminum, clothing, stationery, and toys, a practice criticized as “deflationary exports,” copper appears to be following suit.
Industry insiders predict that China might export up to 100,000 tons of copper per month, the largest volume in 12 years. A smelting industry insider noted, “Refined copper is heavy, making long-distance exports rare. However, if China aggressively pushes its exports, the market impact will be substantial,” adding, “This move extends China’s influence from copper mining to the smelting market.”
Copper, a critical non-ferrous metal, is known as “Dr. Copper” because it serves as a leading indicator for manufacturing and stock markets. Essential for infrastructure like roads, bridges, and power grids, as well as major industries like manufacturing, electronics, and automobiles, copper saw a boom in the early 2000s driven by China’s rapid industrialization. At that time, unprecedented infrastructure investments caused copper prices to increase nearly eightfold.
While the early 2000s copper boom was driven by China’s construction and manufacturing growth, the current boom is fueled by the United States, AI, electric vehicle, and renewable energy sectors. Copper is crucial for extra-high voltage (EHV) cables in data centers; for example, Microsoft’s new data center in Chicago used 2,177 tons of copper. Electric vehicles also require about 80 kg of copper each, four times more than internal combustion engine vehicles.
S&P Global predicts that global copper demand will double from the current 25 million tons per year to 50 million tons by 2035. Daniel Yergin, Vice Chairman of S&P Global, recently told the Washington Post, “Nothing works without copper now.”
Despite the soaring demand in the U.S., China dominates the supply. Last year, China produced nearly 14 million tons of copper, close to half of the world’s total output. Copper prices spiked in March when major Chinese smelting companies agreed to reduce production. As China continues to control supply, it can influence prices significantly, further increasing its market dominance.
China also has a stronghold in the mining sector, rapidly expanding copper mines in regions like Tibet, Xinjiang, and Africa to avoid environmental and human rights issues. In February, China’s largest copper producer, Zijin Mining, obtained approval to expand a Tibetan mine with an investment of about 3 trillion won.
Domestic smelting companies like LS MnM and Korea Zinc also seek to secure mines. Due to permit and environmental issues, it takes about 15 years to discover and develop a new copper mine. Despite rising copper demand and prices, losing the raw material acquisition race would force these companies to buy expensive copper concentrates, reducing profitability.
