[Weekend Money] Copper in Short Supply... Which Stocks Are Expected to Benefit?

Copper Prices Expected to Rise Due to Second-Half Supply Bottlenecks and Increased Demand
Poongsan Named Top Pick; Daechang and Taihan Cable Highlighted as Stocks to Watch

Securities analysts have indicated that, with the overlap of supply bottlenecks expected in the second half of the year and expanding demand from sources such as AI data centers, copper prices are likely to trend upward, making related companies worthy of attention.

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On September 12, Hana Securities predicted that copper prices would rise in the second half of the year, naming Poongsan as its top pick among related stocks, while identifying Taihan Cable and Daechang as companies to watch. Hana Securities stated, "With copper prices hitting all-time highs and further increases expected in the fourth quarter, related companies are likely to benefit."

The report continued, "Poongsan is the top pick because its metal gains (the margin between metal price increases and inventory acquisition cost) and inventory valuation gains are immediately reflected in its quarterly operating results, making the company highly sensitive to price changes. We also recommend paying attention to Daechang, a manufacturer of brass and copper rods, as well as Taihan Cable, a power line and cable company."

This year, copper prices have been strong due to both supply disruptions at major mines and uncertainties surrounding U.S. tariff policy. On the New York Commodity Exchange (COMEX), the price of copper futures in August reached an intraday all-time high of USD 6.87 per pound, while the price of copper on the London Metal Exchange (LME) approached the all-time high set in January.

Last year, the United States imposed a 50% tariff on semi-finished and finished copper products but excluded unwrought products such as refined copper. However, the government is currently considering imposing tariffs on refined copper starting next year. Hana Securities forecast that, since the final tariff policy has not yet been decided, exports to the United States and inventory reshuffling between COMEX and LME will increase volatility in copper prices through the end of the year.

On the supply side, factors such as aging mine facilities, problems securing water, and rising prices for energy and sulfuric acid are making it difficult to rapidly expand production. Worsening shortages of copper concentrate have pushed down spot treatment charges (TC) for products bound for China, adding to the profitability pressures on Chinese smelters. Additionally, the Chinese government has tightened crackdowns on false and circular invoices, reducing the official supply of copper scrap. As a result, it has become difficult for smelters to secure both concentrate (refined ore) and scrap as raw materials.

On the demand side, medium- to long-term demand is expected to grow, led by investments in AI data centers, power grid modernization, and renewable energy. For example, global data center capacity is projected to expand from about 67GW in 2024 to 163GW by 2030. Notably, each 1MW of data center capacity requires about 27 tons of copper.

For these reasons, Hana Securities forecasts a shortage in refined copper supply and sets its average copper price target at USD 14,000 per ton and the fourth-quarter average at USD 14,700 per ton.

This content was produced with the assistance of AI translation services.