Copper futures have surged to approximately $5.5 per pound by late December, reaching their highest level in nearly five months. This rise is attributed to tightened supply chains and vigorous economic growth in the United States that have bolstered prices. During the third quarter, the US economy experienced its most rapid expansion in two years, propelled by increased consumer spending, exports, and industrial activity, thereby benefiting sectors heavily reliant on copper.
Contributing to supply pressures are years of underinvestment, disruptions in mining activities, and plans by China's leading smelters to reduce output by over 10% in 2026 to combat overcapacity challenges. The landscape is further complicated by trade uncertainties and US-imposed tariffs, which have led to increased preemptive stockpiling, mainly for shipments directed to the US.
Additionally, the investment landscape has been influenced by a weaker US dollar and anticipation of further interest rate reductions by the Federal Reserve. Long-term structural demand for copper remains robust, spurred by the growth of electric vehicles, renewable energy, power grids, and artificial intelligence infrastructure. This situation is further mirrored in other base metals like aluminum, zinc, and tin, which have recorded significant annual gains, highlighting the prevailing market tightness for copper.
