Copper Prices Surge Amid Trade Uncertainty and Supply Deficit

The copper market is experiencing a surge in prices fueled by a combination of factors, including the looming threat of tariffs by US President Donald Trump and a global deficit in copper supply. This uptick in copper prices follows President Trump’s mention of potential tariffs on US imports during a recent congressional address, coupled with the initiation of an investigation by the US Commerce Department into the copper market.

Leading financial institutions, such as JP Morgan, are predicting a bullish outlook for copper prices in the coming years. JP Morgan anticipates that copper prices could reach as high as US$11,000 per metric ton in the near future due to an expected global deficit in refined copper, which is projected to grow significantly by 2026. The bank also foresees the implementation of tariffs on copper imports, potentially reaching up to 25%, further driving up prices.

Moreover, JP Morgan warns of a possible accumulation of excess copper stocks in the US ahead of the tariff enforcement, potentially leading to supply shortages globally. This scenario could propel copper prices towards US$10,400 per metric ton by the latter half of 2025. However, the bank also highlights a downside risk to its forecast, citing a slowdown in China’s demand growth from 4% to 2.5% this year as a significant factor that could impact the copper market dynamics.

On the other hand, S&P Global offers a more tempered outlook on copper prices for 2025, attributing potential limitations in price gains to the strength of the US dollar and uncertainties surrounding new US policies. Despite acknowledging ongoing concerns regarding the supply deficit, S&P Global’s forecast of US$9,716 per metric ton for the 2025 LME three-month copper price reflects a more conservative increase of 4.8% year-on-year.

S&P Global also identifies a significant number of copper mining projects set to kick off in the next two decades, with a focus on brownfield projects that are expected to contribute significantly to global copper output. Latin America is anticipated to play a pivotal role in this scenario, contributing an average of 42.9% to global copper production from 2025 to 2035.

Recent data from S&P Global indicates a deficit of 22,000 metric tons in the global refined copper market in December, down from 124,000 metric tons in November, underscoring the tightening supply conditions in the copper market.

In conclusion, the copper market is witnessing a period of heightened volatility and price surges driven by geopolitical uncertainties and supply-demand dynamics. The outlook remains optimistic, with forecasts pointing towards a sustained increase in copper prices in the foreseeable future.