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| Copper Prices |
Copper prices surged towards record highs on Monday, fueled by optimism surrounding an imminent US-China trade deal and ongoing supply disruptions at some of the world’s largest copper mines. The price of copper on the London Metal Exchange (LME) rose by 1.2%, reaching $11,094 per tonne, just $10 shy of the all-time high set in May 2024. Similarly, copper futures on the COMEX traded as high as $5.247 per pound, equivalent to $11,568 per tonne, approaching the record price of $12,330 per tonne hit in July 2024.
US-China Trade Deal Sparks Optimism for Copper Demand
The rally in copper prices is partly driven by hopes that the US and China, the world’s two largest economies, are set to finalize a trade deal. This agreement would boost industrial demand for copper, which is a critical component in a variety of sectors, including construction, electronics, and the growing electric vehicle (EV) industry. Copper is particularly crucial for the global energy transition, as it is used extensively in batteries, wires, and renewable energy infrastructure.
As a result of the expected trade deal, market participants are optimistic about the future outlook for copper consumption, especially in China, which is the largest consumer of copper globally. Copper’s role in the EV and renewable energy markets is expected to grow substantially over the next few decades, supporting long-term demand.
Supply Constraints Raise Concerns Over Copper Deficit
However, the recent price rally is also being fueled by significant supply disruptions at major copper mines worldwide. The Kamoa-Kakula complex in the Democratic Republic of Congo, the world’s largest underground copper mine in Chile, and the Grasberg mine in Indonesia have all experienced major setbacks in production. These disruptions have heightened concerns that global copper supply may struggle to keep up with growing demand.
The International Copper Study Group (ICSG) has revised its 2025 supply forecast, lowering its growth prediction for copper mine output to just 1.4%, down from the previous estimate of 2.3%. The actual growth for 2024 is projected at 2.8%. These supply constraints are raising doubts about producers' ability to meet the increasing demand for copper, especially in the face of growing usage in energy infrastructure.
BHP Group, the world’s largest miner, has projected that global copper demand will increase by 70% by 2050 due to its role in electrification and clean energy. These long-term projections are supporting the bullish sentiment in the copper market, despite the short-term supply challenges.
ScrapInsight Commentary
Copper prices are nearing record highs, driven by both an expected US-China trade deal and ongoing supply disruptions. As the world accelerates its transition to renewable energy, the growing demand for copper, coupled with tighter supply, suggests continued price pressure. This could be an opportunity for scrap copper traders, as recycled material may play a larger role in meeting the growing demand.
