Copper prices are surging, approaching record highs as optimism grows around a potential trade agreement between the United States and China. This development has bolstered an already strong rally driven by recent disruptions at major mining operations worldwide. Signs that the world’s two largest economies are nearing a trade deal this week have improved the demand outlook for the industrial metal, coinciding with increased concerns about production shortfalls in Chile, the Democratic Republic of Congo, and Indonesia.
On the London Metal Exchange, copper prices climbed as high as 1.2 per cent to $US11,094 a tonne, just shy of the record reached in May 2024, before settling slightly lower. The metal has experienced a 25 per cent increase in value this year, recovering from a significant downturn triggered by escalating trade tensions initiated by former US President Donald Trump. Investors are now focused on the delicate balance in copper supplies, a crucial element in global electrification initiatives. BHP, the world’s biggest miner, has forecast global demand to increase by around 70 per cent by 2050.
Several recent events have contributed to the supply concerns. These include flooding at Ivanhoe Mines’ Kamoa-Kakula complex in the Democratic Republic of Congo, a rock blast at Codelco’s primary mine in Chile, and a fatal mudslide at Freeport-McMoRan’s Grasberg mine in Indonesia. These constraints have intensified doubts about producers’ abilities to meet the rising demand for copper in electric vehicles, data centres, and other applications in the coming years.
Demand for copper, used in wires, batteries and pipes, is also expected to benefit from easing tensions between Washington and Beijing. The decline of the US dollar this year has further propelled metal prices, making commodities priced in the US currency more appealing to international buyers. LME copper gained 0.6 per cent to settle at $US11,029 a metric tonne.
