China's latest fiscal stimulus package, announced on Thursday, allocates $28 billion specifically for power grid expansion and ultra-high voltage transmission lines. State Grid Corporation of China confirmed plans to add 28,000 km of new transmission lines by 2027, which is expected to drive 450,000 tonnes of incremental copper demand. The announcement lifted sentiment across base metals markets.
The stimulus addresses a critical weakness in China's power infrastructure, where rapid renewable energy buildout has outpaced grid capacity. Copper-intensive applications including transformers, switchgear, and cabling will account for the majority of the demand increase. The program effectively front-loads infrastructure spending that was previously scheduled for 2028-2030.
Meanwhile, Southeast Asian copper demand has softened, with PMI data from Vietnam, Thailand, and Malaysia all contracting in May. The deceleration is linked to weaker electronics exports and slowing construction activity. However, the combined demand growth from China's grid spend, global AI data center construction, and European electrification is expected to outweigh the EM weakness.
The global copper market faces a 172,000-tonne deficit in 2026, according to the latest ICSG projections. This follows a 98,000-tonne deficit in 2025. LME copper prices have ranged between $12,800 and $14,500/mt year-to-date, reflecting the persistent supply-demand imbalance.
China's grid spending adds a structural demand floor for copper. Procurement should secure rolling 3-6 month contracts rather than spot purchases, as deficits tend to widen during stimulus-driven demand phases. Consider hedging Q4 2026 volumes if LME copper dips below $13,500/mt. The 172kt deficit supports prices above $13,000/mt through year-end.