The Luoyang Mail Processing Center recently purchased a diesel generator set for 1.54 million yuan, while market rumors swirl about copper prices potentially exceeding $12,000 per ton. The power industry is grappling with the dual challenges of rising costs and robust demand.

Sustained increases in copper prices have become an indisputable reality. UBS predicts that refined copper supply growth will be less than 1% in 2026, against an expected demand growth of 3%. China Securities (CICC) has even suggested the possibility of a "historic surge in copper prices by 2026."

Although the core raw material costs for generator sets continue to climb, market procurement demand remains vigorous. A recent diesel generator set procurement project for the China Post Luoyang Mail Processing Center resulted in a winning bid price of 1.5405 million yuan.

1.Price Trends

The copper market is undergoing a structural transformation. As the global shift toward clean energy accelerates, demand for copper from electric vehicles, renewable energy, and grid infrastructure is increasing sharply.

The copper usage per electric vehicle is approximately four times that of internal combustion engine vehicles. Copper's strategic value is further amplified by photovoltaic and energy storage systems, along with global grid upgrade projects.

The supply side faces persistent challenges. Frequent production disruptions in major copper mining regions such as Indonesia, the Democratic Republic of Congo (DRC), and Chile continue to hinder output growth.

Huatai Securities forecasts that the?global copper market could shift from surplus to shortage by 2026, with prices potentially peaking above $12,000 per metric ton. CICC has also projected a "historic-level copper price increase in 2026."

2.Cost Transmission

As critical equipment for power security, the manufacturing cost of diesel generator sets is closely linked to copper prices. Copper constitutes a significant portion of key components like transformers, cables, and motors within these sets.

The winning bid for the Luoyang Mail Processing Center's diesel generator set project was 1.5405 million yuan. Another procurement by the Xiantao City Public Security Bureau in Hubei province for a diesel generator amounted to 1.0856 million yuan.

These cases demonstrate that?despite rising costs, market demand for highly reliable backup power remains strong. This is particularly true for critical infrastructure and essential facilities, where uninterrupted power supply is non-negotiable.

3.Industry Prospects

Data from the China Electricity Council indicates that the nation's total electricity consumption in 2024 reached 9,854 billion kilowatt-hours, marking a 6.8% year-on-year increase. This growth is primarily driven by secondary industries and emerging sectors.

With the rapid expansion of variable renewable energy sources like wind and solar—accounting for 82.6% of new capacity additions in 2024—the power system's need for fast-responding, stable backup power is becoming increasingly urgent.

The China Electricity Council reports that while the national power supply and demand are generally balanced,?regional and temporal power supply tightness can still occur during peak periods, especially under extreme weather conditions.

4.Strategic Positioning

Procuring diesel generator sets represents not just an investment in equipment but a strategic commitment to business continuity and power security.

Against a backdrop of regional and seasonal power supply challenges, backup power is transitioning from an "optional configuration" to a "necessary safeguard." Early procurement helps lock in current prices, mitigates the impact of future cost increases, and ensures reliable power backup during periods of supply strain.

Rising copper prices and growing electricity demand have created a unique market dynamic for diesel generator sets, characterized by both cost pressures and growth drivers.

In the coming years, as global copper supply-demand dynamics evolve and requirements for power system reliability intensify, the backup power market is poised for new opportunities.Proactive planning and early decision-making will be key to capitalizing on this potential.

Confronted with the dual pressures of rising costs and growing demand, the generator set market faces a future of both challenges and opportunities. Market participants are reassessing their procurement strategies to balance short-term costs with long-term value.

As the transition to new energy sources deepens,global power grids are encountering unprecedented demands for stability. In this context, diesel generator sets, as reliable backup power sources, are seeing their strategic value within the power system become increasingly prominent.