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“We can’t tell for sure whether China has been stockpiling, because we don’t really have an idea of the number of stocks it has off exchanges,” says Tompkins.
“But what we can tell is that China has really entrenched itself as a very dominant producer of refined copper.”
Even when other imports slumped, China kept buying up more materials to produce refined copper. The entire increase in global refined copper production in 2023 was down to China, Tompkins adds.
“China has been really pushing up the domestic production of copper and it has been hitting record highs every year,” says Manthey.
This has helped the country cement its dominance in the supply of “materials that will be used in critical industries related to green transition”, Tompkins says.
In part, this has reflected the shifting focus of China’s domestic economy: it has pivoted away from focusing on property development and tech to massively ramping up its production of electric vehicles and solar panels.
However, this market power also gives Beijing significant leverage.
It comes at a time when demand for copper is already predicted to rise, both in the short and longer term.
If nothing else, it will mean higher prices.
“The combination of record low copper stocks [globally], our expectation of peak mine supply next year, rapid green demand growth, and low price elasticity of both demand and supply will in our view lead to copper scarcity pricing in 2025,” analysts at Goldman Sachs said in a recent note.
Historical precedent suggests prices could surge by 25pc over the next 12 months, its economist said.
Manthey says: “If we don’t find new copper deposits or they are not brought online quickly enough, then we’re going to see an extended supply deficit. This would lead to higher copper prices over a longer timeframe.”
Higher copper prices and shortages in the longer term “would also lead to a slowdown in the adoption of green energy and the energy transition”.
If the West wants to avoid a dependence on China, there must be a significant increase in investment in copper mining. That doesn’t look likely from debt-bloated US and European governments.
In the meantime, industry, investors and politicians will all watch nervously as China’s stockpiles rise.
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