Copper prices saw impressive gains in 2024, even breaking the US$5 per pound mark in May. However, the red metal’s gains didn’t last, and by the end of the year copper had retreated back to the US$4 range.
The start of 2025 could be eventful, with Donald Trump returning to the Oval Office, a new stimulus package coming into effect in China and a continued push for greener technologies around the world.
What will these factors mean for copper prices in the new year? Will they rise, or can investors expect the base metal to remain rangebound? Here’s a look at what experts see coming for the important commodity.
Trump will be sworn in for his second term as US president on January 20.
During his campaign, he made bold promises that could shake up the American resource sector, pushing a “drill, baby, drill” mantra and committing to increasing oil production in the country.
When it comes to copper, Trump’s proposed changes to environmental regulations could have key implications. While the Biden administration has sought to toughen these rules, Trump will look to relax them.
In an email to the Investing News Network (INN), Eleni Joannides, Wood Mackenzie’s research director for copper, said changes to environmental regulations are likely to benefit the mining sector overall.
“The former president has already pledged to overturn a 20 year moratorium on mining in Northern Minnesota. This pro-mining approach means more mines could be permitted and put into production,” she said.
The company has been exploring the Bristol Bay region since acquiring the property in 2001, but the US Army Corps of Engineers denied approval in 2020; the Environmental Protection Agency did the same in 2021.
As tensions continue to grow between the west and eastern nations like China and Russia, it may not take much to threaten markets for critical materials, including copper.
Trump has already promised to impose a 60 percent tariff on all goods coming from China.
A tariff on copper imports could upend the president-elect’s plans for the resource sector. It would increase the prices of copper imports and disrupt the overall economy.
“The risk is that the president-elect’s threatened tariffs, including 60 percent on China and 20 percent on all other nations, could derail global economic growth, lead to higher inflation and, with that, tighten monetary policy and also lead to a change in trade flows. Copper will suffer if demand takes a hit,” Joannides said.
“In addition, there is likely to be continued volatility in prices,” she added.
China’s faltering economy has been a major headwind for copper over the past several years.
The country’s housing market accounts for roughly 30 percent of global demand for the red metal, meaning that any shifts could have significant implications for the copper market.
The sector has been struggling for the past few years as the country deals with economic issues, including fallout from the COVID-19 pandemic, which caused disruptions to supply chains and a spike in unemployment.
Other changes introduced at the time include more help from the People’s Bank of China, which will provide a lending facility for state-owned firms to acquire unsold flats for affordable housing.
While these measures may not be felt for some time, kickstarting the Asian nation’s real estate sector could be a boon for copper producers and investors.
“If the Chinese real estate market were to post a recovery, this would see domestic demand for copper tick higher and could lead to a tighter supply and demand balance overall assuming all other things remain unchanged. This would underpin even higher prices than we are currently projecting,” said Joannides.
With copper demand projected to grow long term, supply-side concerns are rising. According to Joannides, there is already recognition that copper exploration has been underinvested over the past few years.
“We are seeing signs this could change. Much of the growth over the last five years has come from brownfield expansions rather than greenfield/new discoveries,” she explained to INN.
“Technology will likely help increase the chance of discovery, and broadly I would say that policymakers are now more supportive of mineral exploration as the push to secure critical raw materials supply has moved up the agenda.”
Rising copper prices could also increase the flow of money from the major companies into the junior space, where most of the exploration is currently occurring.
“Copper has become the standout strategic preference for the major mining companies. The risk-adjusted cost of developing organic copper assets is higher than the cost of acquiring them,” Joannides said.
This kind of acquisition activity could help reduce the development time of assets compared to companies starting exploration from scratch.
While copper supply and demand conditions are expected to remain tight in 2025, competing forces are at play.
One of the biggest factors is Trump’s return to the White House. If the president-elect takes action as quickly as he has promised, investors could soon gain insight on the long-term implications of his policies.
In terms of China, it will take time to get the property sector back to where it was before the pandemic; however, there may be sparks early in the year as new measures start to work their way through the market.
During 2025 it may be even more prudent than usual for investors to do their due diligence on copper and keep an eye on the forces that may affect the market.
Securities Disclosure: I, Dean Belder, hold shares of Northern Dynasty Minerals.
Editorial Disclosure: Los Andes Copper, Osisko Metals and Quetzal Copper are clients of the Investing News Network. This article is not paid-for content.
The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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