Copper futures hovered around $4.71 per pound on Wednesday, stabilizing after a nearly 2% slide in the previous session as traders weighed a stronger U.S. dollar against supportive long-term fundamentals.
Copper holds losses as dollar strengthens
The recent decline was largely attributed to renewed strength in the greenback, which gained on the back of improving U.S. economic data and dovish-leaning but cautious remarks from the Federal Reserve. Minneapolis Fed President Neel Kashkari stated on Tuesday that interest rates should remain on hold until the central bank has more clarity on how elevated tariffs might influence inflation dynamics. His comments reinforced expectations that the Fed will keep policy rates steady for the foreseeable future, helping to bolster the dollar and, in turn, pressuring dollar-denominated commodities like copper.
However, broader market sentiment received a modest lift on the trade front after President Donald Trump announced a delay in implementing a planned 50% tariff on European Union imports, postponing the decision until July 9 to allow for further negotiations. The move helped allay fears of a sudden deterioration in global trade relations, which had threatened to undermine industrial demand and disrupt supply chains. The reprieve offered some relief to commodities markets, particularly base metals, which are highly sensitive to trade flows and global manufacturing activity.
Long-term fundamentals remain supportive
Despite recent price volatility, copper's long-term fundamentals remain broadly supportive. Analysts and industry insiders continue to highlight a persistent mismatch between growing structural demand and constrained supply. The global transition toward clean energy technologies — including electric vehicles, wind and solar power, and energy storage — is expected to drive a significant and sustained increase in copper consumption over the coming decade. At the same time, supply-side challenges such as declining ore grades, delayed mine expansions, and political risk in key producing regions like Chile and Peru are likely to limit new output growth.
In the near term, traders are watching key macroeconomic indicators, including China’s upcoming PMI releases and U.S. PCE inflation data, for further signals on demand strength and monetary policy direction. Meanwhile, any renewed developments in global trade negotiations, particularly involving the U.S., EU, and China, could introduce fresh volatility. Nevertheless, with inventories at historically low levels and long-term decarbonization policies firmly in place across major economies, copper continues to be viewed as a strategic asset in the broader energy transition narrative.
