Copper prices have risen sharply in 2025, climbing over 6% within the first six trading days of the year. On Thursday, copper futures at COMEX reached $4.29 (€4.17) per pound, marking the highest level since December 11. The increase highlights ongoing supply constraints and rising demand for the base metal.
The global shift towards renewable energy, electric vehicles, and artificial intelligence has significantly boosted copper’s demand. However, underinvestment in copper mining could limit supply for years. S&P Global forecasts global copper mine production will peak at 23.5 million tons between 2025 and 2026 before declining annually by 2.3% through 2035. Near-term drivers include China’s economic stimulus measures and refinery overcapacity, which are likely to influence copper prices.
China’s Stimulus Drives Positive Market Outlook
Copper experienced significant volatility in 2024, with prices surging to a record high of over $5 (€4.9) per pound in May before a sharp correction. China, the world’s largest copper consumer and a pivotal force in green energy transitions, played a key role in this fluctuation.
In September 2024, the Chinese government introduced sweeping stimulus measures, including lowering key lending rates, injecting cash through debt issuance, and reducing down payment thresholds for property purchases. These policies briefly triggered a rally in copper prices. However, the rebound was short-lived as subsequent policies failed to materialize, and prices dropped to just under $4 (€3.9) per pound by year-end.
China is expected to intensify its stimulus efforts in 2025, especially with Donald Trump’s presidency. Recent measures include expanding a consumer trade-in scheme to encourage spending and adding more products to its eligible list. Analysts predict further rate cuts and lower bank reserve requirements to support economic growth. Despite these efforts, sustained price growth depends on additional fiscal support from China, particularly in construction and development sectors, according to Kyle Rodda, a senior market analyst at Capital.com.
Trump’s Tariffs Create Potential Risks for Copper Prices
Donald Trump’s presidency poses significant risks for the copper market, as his trade policies could disrupt global supply chains. Trump plans to impose a 60% tariff on Chinese exports and a 25% tariff on goods from Mexico and Canada. While strong US demand for electric vehicles and artificial intelligence-related products could bolster copper consumption, higher tariffs might counteract these gains.
Chinese imports are expected to increase, potentially raising inflation in the US. This could prompt the Federal Reserve to slow its easing cycle or even raise interest rates, which would dampen demand for industrial metals. Additionally, a stronger US dollar could exert downward pressure on copper prices.
Analysts at ING predict copper prices will stay elevated in the first quarter, supported by China’s smelter overcapacity. However, Trump’s tariffs could limit gains in the second and third quarters. Any potential downturn may be offset by China’s continued stimulus measures, leaving the market in a state of cautious uncertainty.
