The copper price marked another all-time high yesterday, Thursday. Three-month futures on the London Metal Exchange (LME) rose temporarily to US$11,800.50 per tonne, exceeding the record that had only been reached at the beginning of the week. This continues copper’s strong rally in the current year – supported by better economic prospects in the USA, a loose monetary policy and its role as an indispensable industrial metal for the energy and technology transition.
Copper and the new Fed growth forecast
The trigger for the latest surge in copper prices was the updated economic forecast from the US Federal Reserve. The Federal Reserve now expects the US economy to grow by 2.3% in the coming year, compared to the previous 1.8%. For an industrial metal like copper, which is used in almost all major economic sectors, this signals more robust demand.
At the same time, the Fed confirmed an interest rate cut and expects inflation in the US to fall to around 2.4%. An environment of lower interest rates, moderate inflation and continued growth generally increases risk appetite and supports economically sensitive commodities. In this context, copper is being watched particularly closely as a barometer of the industrial economy.
Commodity traders are interpreting the new forecasts as an indication that the US economy is so far pursuing a ‘soft landing’ path. For copper, this means that an abrupt drop in demand is not a priority for the time being, while at the same time the cost of capital for investments in infrastructure and industrial projects is falling.
Copper as a central metal of the energy and digital transition
In addition to these short-term impulses, the medium-term story for copper remains clearly structurally driven. The metal is indispensable in power grids, building technology, mechanical engineering, vehicles and in a variety of electronic applications. This is particularly evident in the course of global decarbonisation and electrification.
The energy transition is turning copper into a core raw material: wind and solar power plants, power lines, transformer stations and charging infrastructure for electric vehicles are disproportionately copper-intensive. Modern industrial plants and data centres with high electricity and cooling requirements are also increasing demand. Wherever energy is generated, distributed or converted into digital processes, copper plays a central role.
This is increasingly shifting the perception of the metal: away from a purely cyclical raw material and towards a strategic material with a long-term demand trend. For investors, this moves copper closer to the group of so-called raw materials of the future, which receive structural tailwind from political objectives – such as climate protection.
Supply risks and Chinese impulses
The supply side of the copper market can only keep pace with the demand pressure to a limited extent. The price has already risen by almost 35% over the course of the year – a development that is not only due to the economy, but also to structural bottlenecks. New large-scale mines often take a decade or more from discovery to production, while many existing deposits are reporting declining ore grades and rising costs.
Politics is also playing an increasing role. Regulatory changes, environmental requirements or tensions between producing countries and consumer regions can delay or make projects more expensive. In some important mining regions, water rights and social issues are also at the centre of attention, which creates additional uncertainty on the supply side.
Copper received a fresh boost this week from the political side in China. The People’s Republic is the largest consumer of copper worldwide and at the same time the most important economic rival of the USA. Beijing has signalled that it will stick to a ‘proactive’ fiscal policy – i.e. supporting investments in infrastructure and strategic key industries. This fuels the expectation that demand from the Middle Kingdom will remain high, particularly in areas such as construction, power grid modernisation, e-mobility and renewable energies.
Copper in the field of tension between cyclical and structural trends
The dynamics on the copper market result from the interplay of short-term economic impulses and long-term structural trends. In the short term, prices react to interest rate decisions, economic data and political signals. In the medium term, however, the picture is shaped by three main drivers:
- the electrification of mobility, industry and households,
- the global expansion of renewable energies and power grids,
- increasing digitalisation with growing demand for data centres and infrastructure.
These factors ensure that copper does not simply fade into the background even in phases of economic cooling. Even if there are intermediate corrections, the expectation remains that structural demand will continue to increase in the long term. At the same time, supply reacts only sluggishly, as new projects require high investments, extensive approval procedures and long construction times.
For market observers, it therefore remains open as to whether the recent all-time high of US$11,800.50 per tonne is merely an intermediate stop or already a provisional high point. However, one thing is clear: due to its key role in industry, energy and the digital economy, copper will continue to be the focus of investors, mining companies and politicians in the coming years.
The analysts at ANZ Research are definitely of the opinion that copper will remain above the USD 11,000 per tonne mark in 2026 and should even approach USD 12,000 per tonne by the end of next year. ANZ also justifies this with increasing demand in a simultaneously difficult environment on the supply side.
