Copper surged to a new record on Wednesday on hopes of a U.S.-China deal, with three-month futures on London markets exceeding $11,140 per ton. The 25% year-to-date rally so far has been the best performance for the metal since 2017.
“Copper prices are being supported by a pick-up in risk appetite on optimism about a potential trade deal between the U.S. and China,” Craig Lang, CRU Group’s principal analyst, said per Bloomberg. “The metal has also been supported by the concerns about physical tightness in markets outside of the U.S.,” he added.
The world’s most important industrial metal has had a volatile year. Trade uncertainty, supply shocks, and shifting investor sentiment have pulled its strings along the way. Yet, despite the volatility, structural market tightness continues to support the bullish narrative.
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Industry Volatility Unlikely To Solve
Internal factors remain the primary driver of copper’s rise. Production setbacks at Codelco in Chile, Freeport-McMoRan’s (NYSE:FCX) Grasberg mine in Indonesia, and Teck Resources’ (NYSE:TECK) Quebrada Blanca project have highlighted the fragility of copper supply.
Glencore (OTC:GLCNF) has been the latest to face challenges, lowering its 2025 guidance from 890,000 tons to 850-875,000 tons. Despite a third-quarter rebound, lower grades and water restrictions in Chile’s Collahuasi mine have pushed the production 17% lower year-to-date. The total copper output has now fallen by 40% from 2018 levels.
Meanwhile, Codelco, the world’s largest copper producer, is rethinking its priorities. The Chilean state-owned giant is weighing whether to prioritize profit over production. Bloomberg reported that the company is considering mothballing its low-grade Gabriela Mistral mine and aging Potrerillos smelter. Yet, such a move could prevent the company from returning to its pre-pandemic output levels.
Meanwhile, China’s CMOC Group is taking the opposite approach. The company announced a $1.1 billion investment to expand its KFM copper mine in the Democratic Republic of Congo. The investment would add around 100,000 tons per year from 2027.
Trade Wars Take A Pause
Beyond the industry, external factors have played a significant role this year. Earlier in 2025, President Donald Trump’s threat to impose 100% tariffs on Chinese imports prompted a wave of copper stockpiling in the U.S.
Traders rushed to secure supplies ahead of the tariffs, creating notable mispricing between New York and global markets. But when Trump unexpectedly exempted commodity-grade copper from the tariffs, the rush quickly subsided, leaving inventories stranded and global prices volatile.
Now that a potential trade deal between Washington and Beijing is back on the table, sentiment has turned positive again.
Investors are shifting their attention from trade distortions to the deeper structural issues plaguing the copper industry — from chronic underinvestment to worsening mine reliability. If those supply challenges persist, the copper bull run could have further to go.
Price Action: iShares Copper and Metals Mining ETF (NASDAQ:ICOP) is up 53.17% year-to-date.
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