Copper prices have risen sharply in 2025, climbing over 6% in the year’s first six trading days. COMEX copper futures increased for the fourth consecutive day, reaching $4.29 (€4.17) per pound on Thursday at 5:10 am ECT, the highest level since December 11.
This rally highlights ongoing supply issues and growing demand for copper in global markets. The metal’s importance in renewable energy, electric vehicles, and artificial intelligence has strengthened its demand outlook. However, underinvestment in copper mining continues to pose a long-term challenge. According to S&P Global, global copper mine production will peak at 23.5 million tons between 2025 and 2026 before declining annually by 2.3% through 2035.
In the near term, China’s economic stimulus measures and its refinery overcapacity are driving copper’s price increases.
Chinese Stimulus Drives Optimism for Copper Demand
Copper experienced a volatile year in 2024, surging to a record above $5 (€4.9) per pound in May before a sharp drop. China, the world’s largest copper consumer and a leader in green energy, played a key role in these price swings.
In September 2024, Beijing introduced significant stimulus measures, including reduced lending rates, direct cash injections, and lower property down payment requirements. These steps briefly boosted base metal prices but lacked sustained impact due to limited follow-up actions. Copper prices ended 2024 just under $4 (€3.9) per pound after peaking again at $4.8 (€4.7) in late September.
With Trump’s presidency anticipated to influence global trade, analysts expect China to accelerate its stimulus measures. The government recently expanded a consumer trade-in program to boost demand for home appliances and is likely to implement further rate cuts and reduced bank reserve requirements.
However, analysts remain cautious. “We need more direct fiscal support for construction and development in China to sustain rising copper prices,” said Kyle Rodda, senior market analyst at Capital.com.
Trump’s Tariffs Threaten Copper’s Uptrend
Despite strong demand drivers, the US President-elect’s tariff policies could weigh heavily on copper markets. Trump has pledged to impose a 60% tariff on all Chinese exports and a 25% tariff on goods from Mexico and Canada.
While strong US economic performance, the electric vehicle boom, and AI advancements continue to drive copper demand, increased Chinese imports could push US inflation higher. This scenario might prompt the Federal Reserve to pause or reverse its easing cycle, slowing the global economy and weakening industrial metal demand.
A robust US dollar could also pressure copper prices. ING analysts predict that copper prices will stay elevated in early 2025, supported by Chinese smelter overcapacity. However, Trump’s tariffs may cap the uptrend from the second to the third quarter. Any potential downtrend might still be mitigated by additional Chinese stimulus measures later in the year.
