Copper prices fluctuated significantly during a volatile trading session, with futures on the London Metal Exchange (LME) surging upon reopening after the Christmas holiday, continuing a strong end-of-year rally amid tightening global availability. Initially, prices skyrocketed by 6.6% in early trading, marking the highest intraday gain since 2022, nearly reaching $13,000 per ton. However, prices settled later, closing 0.5% higher in London, while New York futures receded, negating much of Friday’s earlier 5% gain.
This uptick caps an impressive year for copper, with the market poised for its best performance since 2009. The rally has been influenced by a series of unexpected mine outages, uncertainties surrounding U.S. trade policies, particularly under former President Donald Trump, and significant pressures on global smelters. Recently, a renewed influx of shipments to the U.S. has further drained copper from the broader market, compounding the tightening supply despite a slowdown in demand from China, the largest consumer of copper.
In addition to trade dynamics, a series of mishaps affecting major mines have exacerbated supply constraints. A deadly incident at Indonesia’s second-largest copper mine, coupled with an underground flood in the Democratic Republic of Congo and a fatal rock blast at a Chilean mine, have all contributed to the current strain on copper availability.
Despite these supply challenges, long-term demand prospects for copper remain robust, driven by trends in electrification essential for power grids, energy infrastructure, and manufacturing. Investors are optimistic that burgeoning copper consumption will further escalate to satisfy the growing energy needs linked to advancements in artificial intelligence.
However, some analysts caution that recent price hikes may be excessive, especially with a downturn in underlying usage in China. Wu Kunjin, head of base metals research at Minmetals Futures Co., points out that certain fabrication plants in China, sensitive to copper prices, have begun reducing or even halting production in light of the recent increases.
As per the latest data, LME copper closed at $12,222 per ton, with other industrial metals displaying mixed performance. Overall, while challenges remain, the outlook for copper suggests a resilient market capable of supporting long-term growth as it pivots to new opportunities in electrification and technology.