Copper futures held steady around $4.83 per pound on Monday, stabilizing after a week of heightened volatility driven by a confluence of supply-side disruptions and renewed trade policy uncertainty.
Copper prices stabilize after turbulent week
The metal had surged as much as 8% the previous week, buoyed by mounting concerns over supply constraints stemming from operational setbacks at key mining hubs in South America and Africa. Labor disputes in Chile, the world’s largest copper producer, and temporary shutdowns at mining sites in the Democratic Republic of Congo and Zambia added to fears of a global supply squeeze.
Further fueling bullish sentiment, President Donald Trump signed an executive order last week doubling tariffs on imported steel and aluminum to 50%, sparking speculation that copper may soon face similar trade restrictions. The US Department of Commerce is currently conducting a Section 232 investigation into copper imports, and traders are closely monitoring developments for any signs of impending tariff action. A formal move to impose duties on copper could tighten the US market and raise prices further, although it would also risk escalating trade tensions with key suppliers such as Mexico, Peru, and Canada.
At the same time, physical market indicators continue to reflect strong underlying demand. Copper inventories at London Metal Exchange (LME) warehouses have steadily declined in recent weeks, falling to their lowest levels since mid-2022. This drawdown suggests resilient consumption from industrial powerhouses like China, despite mixed economic data, and ongoing demand growth in the clean energy and electric vehicle (EV) sectors, where copper plays a critical role in wiring, batteries, and charging infrastructure.
Analysts issued cautious notes
Nonetheless, several analysts have issued cautious notes, warning that prices near multi-year highs may soon begin to dampen buying activity, especially in price-sensitive manufacturing segments. The risk of demand destruction is rising, particularly in emerging markets facing higher borrowing costs and currency volatility. Moreover, some speculative froth appears to be building in the copper market, with fund positioning reaching the most bullish levels in over a year, raising the possibility of a short-term correction if sentiment turns.
Looking ahead, the trajectory of copper prices will likely hinge on the outcome of US trade policy decisions, the pace of global industrial activity, and any further disruptions to mine output. Meanwhile, long-term fundamentals remain supportive, with structural supply deficits projected to persist due to underinvestment in new mining capacity and rising demand linked to the global energy transition.
