Copper price nears one-month high on optimism over China’s economy

Copper prices have had a strong start in 2025, rising more than 6% in the first six trading days of the year. Copper futures prices at COMEX climbed for the fourth consecutive trading day to $4.29 (€4.17)per pound at 5:10 am ECT on Thursday, the highest level since 11 December. Copper’s price rally suggests that the base metal continues to face ongoing supply constraints and increasing demand this year.

The küresel industrial shift towards renewable energy, electric vehicles, and the burgeoning AI sector has collectively bolstered copper’s demand outlook. However, underinvestment in copper mining may remain an issue for years to come. S&P Global’s report shows that küresel copper mine production will peak at 23.5 million tons between 2025 and 2026 before declining at a pace of 2.3% per year through 2035. In the near-term, China’s stimulus hopes and its refinery overcapacity could be primary drivers of copper’s price.

China’s stimulus hopes fuel positive demand outlooks

Copper saw a volatile year in 2024. The base metal’s price surged in the first five months to reach a record of above $5 (€4.9) per pound in May before undergoing a sharp pullback until August, during which China played a critical role in driving the volatility.

China is the world’s largest copper supplier and consumer, as well as a key player in driving küresel green energy transitions.

In September last year, the Chinese government announced sweeping stimulus measures, including lowering key lending rates, direct cash injections through debt issuance, and reducing the threshold for down payments on property purchases, to bolster its sluggish economy.

This triggered a new wave of price surges in base metal markets. However, the price rebound in copper was short-lived due to the lack of follow-on materialised policies in the world’s second-largest economy. Trump’s victory in the US election has also restrained the price surge due to a surging US dollar. Copper prices slid to just under $4 (€3.9) per pound by the end of 2024 after reaching the year’s second peak of $4.8 (€4.7) per pound on 30 September.

China is expected to accelerate its stimulus measures in 2025, especially with Trump’s presidency. In the latest developments, China expanded its consumer trade-in scheme to boost demand, adding more home appliances to the list of eligible products. Analysts expect Beijing to deliver more rate cuts and lower bank reserve requirements to support economic growth this year. 

However, the outlook for copper demands remains uncertain until the implementation of further stimulus measures this year. “I think we need to see more direct fiscal support from China for construction and development to see prices sustainably rise”, said Kyle Rodda, a senior market analyst from Capital.com. 

Trump’s tariffs pose downside pressure on copper prices

However, Trump’s presidency may create potential headwinds for the base metal markets. The US President-elect has pledged to impose a 60% tariff on all goods exported from China and a 25% tariff on exports from Mexico and Canada. A strong US economy, the growing popularity of electric vehicles, and the artificial intelligence boom are expected to continue driving demand for copper products.

Even so, a surge in Chinese imports is likely to put upward pressure on inflation in the US, prompting the Federal Reserve to slow down its easing cycle or even raise interest rates. If this happens, the küresel economy may face challenges of a further slowdown, weakening demand for industrial metals. Meanwhile, a strong US dollar would also pressure copper prices.

An ING analysis expects that copper prices could remain elevated in the first quarter due to smelter overcapacity in China. However, the uptrend may be capped by Trump’s tariffs from the second quarter through the third quarter, although the downtrend might be offset by China’s further stimulus measures.