Recently, I noticed an interesting aspect of the copper sector—many people are paying attention to copper stocks, but in fact, many don't understand the logic behind copper price fluctuations and related stocks. So today, I’ll organize this industry chain and also discuss current investment opportunities.

From mining to application, the industry chain of copper is actually quite extensive. Upstream is copper mining, midstream is smelting and processing, downstream involves various end-use applications. These three segments have completely different sensitivities to copper prices, so it’s essential to understand them when investing.

Upstream miners are the most directly benefited. Companies like Freeport-McMoRan and BHP mainly produce copper. When copper prices rise, their profits directly increase. These companies tend to fluctuate in sync with copper prices. I looked at FCX’s recent performance; a while ago, their stock surged due to expectations of increased capacity. After their large Indonesian mine Grasberg underwent repairs, they expect to boost output significantly this year, which provides solid support for their stock price.

Midstream smelters are different. They only refine copper ore into refined copper and earn processing fees. Fluctuations in copper prices have little impact on them; instead, they focus on whether the processing fee TC is high. Currently, processing fees are relatively low, so these companies don’t have much short-term highlight.

Downstream is the interesting part. Copper is a cost for them; when copper prices rise, their profit margins can actually be squeezed. However, these companies often benefit from demand in AI data centers and power infrastructure. Demand for wires, cables, PCB copper foil, and heat dissipation modules is rigid and won’t decrease just because copper prices are high. Taiwan’s Huaxin and First Copper are typical examples; their order books are full, and capacity utilization is near maximum.

Speaking of investment opportunities in Taiwanese copper stocks, First Copper’s recent performance is worth noting. They are Taiwan’s largest copper foil processing plant, highly sensitive to copper prices. When copper prices stay high while costs remain low, the price difference can generate substantial gross profit. Plus, with strong demand from AI servers and electric vehicles, their ability to pass on costs is also good.

HuaRong offers a different perspective. They are less concerned with short-term copper price fluctuations; their focus is on the rigid demand driven by Taiwan’s power grid upgrades. Orders for ultra-high-voltage cables remain above NT$8 billion, with capacity nearly full. As Taiwan’s AI data centers start construction, the demand for stable power will only increase. They also hold shares in high-end copper foil manufacturers like Jinyi, providing additional investment returns.

Internationally, Glencore and BHP have different logic. Glencore isn’t a pure copper company but controls resources like copper, cobalt, and nickel, and is the world’s largest commodity trader, so it can also benefit from this mining cycle. BHP is more conservative; early this year, they announced an increase in copper production target to 1.9–2 million tons, maintaining a cash flow dividend payout ratio above 50%, making them a choice for institutional investors during the copper bull market.

Regarding investing in copper stocks, be cautious in the short term. The recent rally has been quite large, and sentiment is somewhat overheated. However, in the long run, structural shortages on the supply side are the norm. Over the past decade, global copper mining capital expenditures have been insufficient, leading to new mine production lagging behind demand. Declining ore grades in Chile and Peru also limit supply growth. On the demand side, driven by AI computing power and global power grid upgrades, the gap is hard to fill in the short term.

Therefore, the investment strategy should be: pick the right targets and avoid periods of excessive enthusiasm. Upstream miners are suitable for growth-focused investors; midstream smelters are temporarily less attractive; downstream companies should focus on order flow and capacity utilization. The key follow-up is to watch Q1 and Q2 earnings reports—whether smelters can effectively pass on costs, and whether miners will raise their capacity guidance again.

Copper stocks can be invested directly through individual stocks, or via copper concept ETFs or CFD trading. If you want to trade copper and related concept stocks within one account, many trading platforms support that. Overall, grasping the global economic cycle is crucial—buy actively during expansion periods for long-term holding, and stay alert when recession signals appear.