Copper, a fundamental industrial material, is forecasted to surpass $12,000 per ton this year and break its all-time high price record.
This dramatic increase is fueled by rising global demand and the looming tariff threats from the Trump administration.
On Tuesday, the Financial Times (FT) reported that the world’s largest commodity trading firms presented this outlook at the FT Commodities Summit in Lausanne, Switzerland.
Commodity trading companies such as Mercuria and Trafigura and hedge fund Frontier Commodities unanimously predicted a sharp rise in London Metal Exchange (LME) copper prices this year. The LME price serves as the global benchmark for copper prices.
After reaching nearly $11,000 per ton in May last year, LME copper prices experienced a downturn.
However, the market has rebounded in 2023, with copper prices jumping to about $10,000 per ton on Tuesday.
Kostas Bintas, head of Mercuria’s global metals division, predicted that copper prices would surpass $12,000, citing the current tight supply.
Bintas noted a shift in market dynamics, with U.S. imports now playing a more significant role than when China’s demand dictated prices. He estimated recent U.S. copper imports at 400,000 to 500,000 tons.
Two key factors are driving the surge in U.S. copper imports.
The first is the Trump tariff effect.
Following the 25% tariffs on steel and aluminum, Trump is also expected to impose tariffs on copper, prompting traders to rush to move copper to the U.S.
With the expectation of U.S. copper tariffs, the price gap between LME and New York Mercantile Exchange (NYMEX) copper prices is widening. On Tuesday, NYMEX prices were $1,350 higher per ton.
Beyond tariffs, fundamental demand growth is propelling copper prices upward.
Developed nations, including the U.S. and EU members, are undertaking massive power grid upgrade projects, significantly boosting copper demand for power lines.
Aline Carnizelo, a Frontier partner, emphasized the enormous copper requirements for these upgrades and predicted that copper prices would approach $12,000 per ton.
Copper is used in power lines, various technologies, construction, and renewable energy applications.
Graeme Train, head of metals analysis at Trafigura, stated that while the global economy is “a little fragile” and the uncertainty about whether the U.S. will impose tariffs on copper could affect copper prices, copper prices are fundamentally bound to rise.
Train explained that U.S. purchases will continue, driven by a critical domestic supply shortage.
