Copper futures rose to over $4.3 per pound in February, a two-week high, as improving conditions in the world’s largest manufacturing sectors bolstered the outlook for base metal demand while markets assessed the impact of escalating trade restrictions between China and the US.
Copper futures rose to over $4.3 per pound
In the US, factory activity expanded for the first time in over two years in January, according to data from the Institute for Supply Management (ISM), reinforcing expectations of stronger industrial demand for copper. Meanwhile, a private-sector survey from Caixin indicated expansion in Chinese manufacturing, offering some relief after the official NBS Purchasing Managers' Index (PMI) showed contraction. Analysts noted that the divergence was likely influenced by volatile stocking and destocking cycles, as firms adjusted to trade uncertainties and disruptions from Chinese New Year celebrations.
Uncertainty remains
However, uncertainty remains in the copper market as treatment and refining charges at Chinese copper smelters continue to signal cautious purchasing behavior, suggesting that demand stability has yet to be fully established. Supply-side constraints also persist, with disruptions in major mining regions such as Chile and Peru adding pressure to global copper availability.
Focus on policies
On the policy front, Beijing signaled plans for a batch of fiscal stimulus measures set to roll out this year, aligning with increasing credit demand driven by previous monetary easing efforts. These policies raised hopes for stronger demand for factory goods, particularly in infrastructure, renewable energy, and electric vehicle production—sectors heavily reliant on copper. Additionally, expectations of potential interest rate cuts by the Federal Reserve fueled optimism for industrial metals, as lower borrowing costs could stimulate economic activity and support broader commodity demand.
