Copper prices have risen by over six per cent in the past five days of trading, as China, the world’s largest copper consumer, drives higher demand.
Copper futures were trading at $US4.33 ($6.99) per pound (lb) at last close, up from $US4.06/lb on January 6.
S&P Global said the rally reflects robust demand from China, which continues to drive demand through economic stimulus measures, and ongoing supply constraints.
China’s copper imports for December 2024 reached a 13-month high, rising by 17.8 per cent year-on-year to 559,000 tonnes, according to data released by the country’s customs on Monday.
After an unpredictable 2024, copper prices are benefitting from policies aimed at revitalising China’s economy, including lower lending rates, debt issuance, and reduced payment thresholds for property purchases.
This comes as an expanded trade-in scheme to boost consumer spending spurs industrial activity.
The global shift toward renewable energy, electric vehicles, and artificial intelligence is supporting copper’s long-term demand, but the underinvestment in copper mining remains a concern.
S&P Global projects global mine production will peak at 23.5 million tonnes by 2026 before declining by 2.3 per cent annually through 2035.
Despite these positive drivers, challenges loom for the copper price. Donald Trump’s return to the US presidency brings policy uncertainty, as proposed tariffs of 60 per cent on Chinese goods and 25 per cent on imports could disrupt trade and industrial metal demand.
In addition, a stronger US dollar and potential inflationary pressures may prompt the Federal Reserve to adjust interest rates, putting further pressure on copper prices.
Analysts predict that copper prices will remain elevated in the first quarter of 2025 due to China’s smelter overcapacity.
However, Trump’s tariffs may cap this uptrend by the second quarter unless Beijing intensifies its stimulus measures.
“I think we need to see more direct fiscal support from China for construction and development to see prices sustainably rise,” Capital.com senior market analyst Kyle Rodda said.
The interplay between Chinese stimulus and US trade policies will likely determine the trajectory of copper prices as the year unfolds.
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