Prices of copper hit a two-year peak.
Coping with Copper's Climb
By the end of trading on Comex on May 13, the July copper futures soared by 2.2%, hitting an impressive $4,766 per pound, the highest since April 18, 2022, according to Dow Jones Market Data. As of 12:40 PM Moscow time on May 14, these futures were trading well above the $4,800 mark. The all-time high, set on March 4, 2022, stands at $4,9375 per pound.
In the last two months, copper has seen a considerable surge, gaining approximately 28%. This information, reported by MarketWatch, sheds light on copper's robust performance. On the London Metal Exchange (LME), trading in three-month copper futures closed on May 13 at $10,185 per ton, briefly touching values above $10,200 during the session.
The escalating copper prices are largely driven by the investor community's expectations that global ore supplies will struggle to match increasing demand. Commodity traders forecast a rise in copper demand by 1 million tons by 2030, fueled by artificial intelligence development and data center expansion. In contrast, a 35,000-ton deficit is expected in 2024, with global demand anticipated to reach 26 million tons, and the deficit estimated to grow to 100,000 tons by 2025.
The escalating copper prices, along with the surging prices of other commodities like gold, signal broad expectations for sustained economic growth and potential inflationary pressures. Copper is also considered an economic indicator due to its widespread use in construction and electronics production.
Analysts at Pave Finance attribute this copper price increase to optimism about the resumption of global economic growth, led by the US, and hope for a rebound in China's economy. They also point out that demand is being driven by those seeking to profit from consistent inflationary pressure.
The Rise of Copper Prices: A Retrospective
Over the past year, copper prices surged to $5.02 per pound in 2022 due to several factors:
- Post-pandemic recovery: With the economic recovery of global economies, the demand for copper substantially increased as industries resumed their activities.
- Supply disruptions: Production cuts at key mines like Cobre Panama and Chuquicamata tightened the supply of concentrate, weakening the market's resilience.
- Green energy demand: The burgeoning demand for electric vehicles (EVs) and renewable energy infrastructure amplified copper's critical role.
Future Trends and Risks
As of Q2 2025, copper prices exhibit renewed volatility, with recent rallies driven by factors such as trade truce optimism, supply deficits, and diplomatic developments. However, the near-term stability of the market is threatened by the recent U.S. auto parts tariffs and China's expanded 125% retaliatory duties, as well as weak Q1 2025 U.S. GDP (-0.3%) and Chinese manufacturing contraction.
Under a bull case scenario, prices could reach $10,000/tonne (~$4.54/lb) by late 2025 if trade tensions ease, while the downside risks could see prices plummet to $8,500/tonne (~$3.86/lb) if tariffs persist.
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- The surging copper prices, as reported by MarketWatch, indicate a robust recovery in the industry, particularly driven by the post-pandemic economic recovery and the demand for copper in green energy and construction.
- In the coming years, copper futures might reach the highest levels ever recorded, potentially breaching the $10,000 per ton mark, according to analysts at Pave Finance, based on optimism about global economic growth and continued demand due to inflationary pressures.
- Key risks to this optimistic outlook include U.S. auto parts tariffs and China's expanded retaliatory duties, which could exacerbate near-term market instability and lead to a decline in copper prices.
- The ongoing development of artificial intelligence and data centers, as well as the expansion of the electric vehicle market, are expected to drive the demand for copper and further fuel the futures market in coming years.
