Tianfeng: Copper supply growth rate is declining, copper prices support profitability of copper mining companies.

Tianfeng released a research report stating that by 2025, a significant decrease in TC benchmark will loosen mining costs, leading to a significant increase in copper prices. The profit of copper mines in 2025 may continue to maintain the high level of 60% since 2024. However, the supply growth of copper mines is moving in the opposite direction, turning downward. In recent years, many Chinese copper mining companies have expanded to resource-rich areas such as Africa and South America. Under pressures such as high costs and resource protectionism, they have increased reserves through mergers, acquisitions, and joint ventures. In addition, the construction of supporting infrastructure is constantly being strengthened to further improve production and transportation efficiency, in order to reduce long-term costs. Key points from Tianfeng: - The decline in copper mine supply growth in 2025 - According to the Q2 financial reports and updated information from mining companies, copper mine production in 2025 is expected to remain stable, with an overall growth rate of about -0.12%. The supply growth of copper mines has been downgraded compared to the beginning of the year, and has decreased from the growth rate in 2024. The significant decrease in TC benchmark in 2025 has loosened mining costs, leading to a significant increase in copper prices. The profit of copper mines in 2025 may continue to maintain the high level of 60% since 2024. However, the supply growth of copper mines is moving in the opposite direction, turning downward. - Caution in new expansions + high production costs supporting high global copper mine interference rate, long-term growth rate may not be optimistic, considering interference in 2026 growth rate may be about 2% - In the defensive capital expenditure phase, new expansion projects of copper mines are already limited, and they often face delays in construction progress due to factors such as large initial investments and resource protection. Since 2020, copper mine production costs have been high, highlighting the vulnerability of high-cost mines at the end, with the potential for production cuts or shutdowns during times of high price volatility. Copper prices lead the copper mine cycle by about 1 year, the high profit situation from 2024-2025 should support an increase in copper mine output in 2025-2026. However, in the context of a high interference rate, the growth rate may not be optimistic. Supply repeatedly falling short of expectations can provide long-term support to prices, while the inability to smoothly transmit to increased supply will further solidify prices around relative lows. - Copper prices support the profitability of copper mining companies, focusing on resource targets that are constantly expanding their footprint - China's copper reserves account for only 4% of the global total, but its production accounts for 8%, showing a lack of balance in extraction and reserves, and the scarcity of resources. Companies urgently need to expand their footprint to resource-rich countries. In recent years, many Chinese copper mining companies have expanded to resource-rich areas in Africa, South America, and other regions. Under pressures such as high costs and resource protectionism, they have increased reserves through mergers, acquisitions, and joint ventures. In addition, the construction of supporting infrastructure is constantly being strengthened to further improve production and transportation efficiency, in order to reduce long-term costs. - Recommended targets: ZIJIN MINING (601899.SH), MMG (01208), CMOC Group Limited (603993.SH), Jchx Mining Management (603979.SH), Western Mining (601168.SH), etc. - Risk factors - Sample selection risks, subjective judgment risks, operational risks caused by Sino-US trade frictions, risks of company expansion falling short of expectations, risks of downstream demand falling short of expectations, risks of fitting calculations.