The copper market is starting the week with tailwind: Prices are moving towards record levels, supported by growing confidence in an imminent agreement in the trade dispute between the US and China. At the same time, supply disruptions in some of the world’s largest mines are acting as an additional price driver. Despite temporary setbacks in the wake of US trade policy, copper has been up more than 25% since the beginning of the year – a sign of how strongly demand signals and supply risks are currently intertwined.
Copper: Prospect of US-China Agreement Improves Demand Outlook
For the industrial metal copper, the relationship between the two largest economies is a central factor. Indications of an impending agreement between Washington and Beijing improve the view of industrial activity – from electronics and mechanical engineering to the construction industry. An easing of trade tensions would increase predictability and encourage investment, which usually supports the demand for cables, components and infrastructure material.
This macroeconomic component meets a market that is already narrowed by persistent supply uncertainties. Market observers point out that buying interest is starting earlier than it did a few months ago – an indication that buyers and traders are using price dips to secure inventories in anticipation of more robust demand. For copper as an economic barometer, geopolitical hope is thus directly transferred into price fantasy.
Supply Side under Pressure: Mine Disruptions and Lowered Forecasts
At the same time, disruptive factors are accumulating on the supply side. In recent months, the Kamoa-Kakula complex in the Democratic Republic of Congo, the largest underground mine in Chile and the large Grasberg mine in Indonesia have reported incidents. Such events increase the risk of a copper supply deficit – all the more so if they occur simultaneously.
Against this background, the International Copper Study Group (ICSG) corrected its production outlook for 2025 downwards: Instead of an increase in mine production of 2.3%, the organisation now expects only 1.4%. For comparison: In 2024, the actual growth was still 2.8%. Lower increases in production meet stable to rising demand – a constellation that can favour price peaks, provided that there is no rapid easing on the supply side.
For producers, the situation means operational and strategic challenges: Maintenance windows, approval processes and investment decisions are influenced by bottlenecks as well as by the requirements for safety and environmental standards. For the market as a whole, the susceptibility to fluctuations and the sensitivity to new news from the mining regions increase.
Energy Transition as a Structural Driver for Copper
In addition to cyclical impulses from the economy, a long-term trend is taking effect: the energy transition. Copper is elementary for power grids, e-mobility, charging infrastructure, renewable energies as well as for batteries and heat pumps. Manufacturers use the metal in cables, motors, converters and piping systems – wherever conductivity, durability and efficiency are required.
According to estimates by major mining groups, global copper demand is likely to increase significantly by 2050. The BHP Group, the world’s largest mining group, expects demand to grow by around 70% by the middle of the century. These projections underline that even moderate mine growth will not automatically be sufficient to cover demand in the future. Expansion projects, higher recycling rates and efficiency improvements will therefore become increasingly important in order to stabilise the balance between supply and demand.
Weaker US Dollar Supports Metal Prices
Another factor in the current environment is the US dollar. Its decline over the course of the year makes raw materials priced in US currency cheaper for buyers outside the dollar area. This exchange rate component reinforces the tendency of rising prices for industrial metals – including copper. As a result, the market reacts not only to physical scarcity and macro data, but also to currency fluctuations that influence trade flows and hedging decisions.
For the short-term development, volatility remains high: New news on US-China talks, reports on mine availability or adjustments to supply and demand forecasts can quickly trigger price fluctuations. In the medium term, the focus is on the question of whether the ICSG’s approach to lower mine growth will last, how quickly disrupted capacities will restart – and whether the industrial dynamics will overlay or dampen the high price sensitivity of the customers.
Conclusion: The copper market is moving in the field of tension between geopolitical hope of relaxation, real supply bottlenecks and structural additional demand due to the energy transition. Lower dollar quotations additionally reinforce the price movements. Whether the start towards record levels will last depends on the balance between short-term reports from the supply side and the longer-term investment cycle.
