Copper Prices: The Rollercoaster Ride of 2023 and Expectations for 2025
In May, Comex copper reached an unprecedented intraday high of nearly $5.20 per pound, or $11,500 per tonne. This surge resulted in net trading volumes soaring to $100 billion in a single day, twice the daily average for the Dow.
However, cooler heads in London recognized that this price spike was primarily a U.S.-based event. Cargoes intended for Rotterdam and Shanghai were swiftly redirected, while LME futures have yet to reach $11,000 per tonne.
Copper: The Next Big Thing
A French hedge fund manager, known for being consistently confident, predicted copper could reach $40,000 per tonne within the next four years. This claim resonated with many who have spent decades analyzing metal markets, dubbing copper “the new oil” and suggesting significant price increases were on the way.
Despite the hype, just like the foam on a poorly poured beer, excitement in the copper market started to fade quickly.
At the end of September, managed money longs made a renewed attempt to rally prices, buoyed by expectations of substantial economic stimulus from Beijing. Yet the anticipated surge fell short, mirroring unfulfilled promises from the National People’s Congress. A strong U.S. dollar and tariffs introduced during the Trump administration further dampened copper’s optimistic trajectory, leading to a decline in its value as the year came to an end.
What’s Ahead for 2025?
As we look forward, the futures market can be entertaining, but real-world developments progress at a slower pace. Still, surprises can emerge from beneath the earth’s surface.
After the loss of Cobre Panama, the copper market adapted without significant disruption. Codelco managed to maintain its pace, while Escondida, the world’s largest copper mine, reported a remarkable 22% increase in production year-over-year. Chile’s overall copper output rose by more than 6% thanks to these gains.
According to Chile’s mining association, production is expected to be between 5.4 million and 5.6 million tonnes in 2025. While major new mines are scarce, several expansions, including Almalyk in Uzbekistan, Kamoa Kakula, and QB2 in Chile, will contribute to fresh supply.
Congo’s Impact
The Democratic Republic of the Congo (DRC) is poised to add significant volume to the copper market in 2025, with CMOC’s Tenke Fungurume, Kisanfu, and Kamoa all projected to perform robustly. Historically, the DRC has accounted for the most production growth in recent years.
While the U.S. last led global production in 2008, positive signals regarding regulatory approvals may enable a resurgence in American copper production in the future.
BMO expects a well-supplied copper market with growth rates around 2.8%. Macquarie anticipates as much as a 4% increase in output for 2024, suggesting a healthier pipeline than previously believed.
Demand Trends
In terms of demand, the long-term outlook for copper remains strong due to the energy transition. However, immediate market responses are significantly affected by China’s economic policies. China consumes approximately 56% of the global copper supply, or around 15 million tonnes.
Recent research indicates that any downturn in Chinese construction activity could significantly counterbalance electrification demands. RBC Capital Markets expects global copper demand to increase by 2.9% in 2025, driven mainly by growth outside China, which is predicted to expand by only 1%.
BMO is slightly more optimistic, estimating a 2.2% growth in China amidst a continuing construction slump, which affects project completions.
Market Signals
Following a recent agreement between Antofagasta and Jiangxi that set treatment charges at a historic low of $21.25 per tonne, industry sentiment improved. However, analysts highlight that this situation reflects smelter overcapacity rather than true demand for copper concentrate.
In 2024, the surplus of refined copper reached its highest level in over a decade due to unmet supply cut promises from Chinese refiners. BMO predicts a smaller surplus of around 100,000 tonnes this year, while RBC’s estimate is considerably lower. Macquarie expresses the least optimism, forecasting a surplus three times larger than BMO’s but a deficit for concentrate markets.
Price Forecasts
Goldman Sachs, once bullish on copper prices, has revised its forecast downward by $5,000, yet still expects an average price of $10,160 per tonne next year. Morgan Stanley anticipates prices will reach $9,500 by the end of 2025, whereas the Chile mining association estimates a range of between $9,260 and $9,920.
Conversely, Citigroup has lowered its forecast from $10,250 to $8,750, while RBC has adjusted its expectation down to $8,800. BMO shares a similar outlook, predicting prices around $8,800 as well. Capital Economics takes a more pessimistic stance, forecasting that copper prices may fall below $9,000, averaging only $8,000 by the end of 2026.
