On January 10, 2025, my Barchart article on base metals highlighted copper’s 11.56% Q4 decline and its 3.50% price appreciation in 2024. The article also cited a significant increase of over 62% in LME copper stocks to 271,400 metric tons at the end of last year. Copper began 2025 on a bullish note, with a 6.27% rally in January. March copper futures settled at the $4.2790 per pound level on January 31 and were higher in late February.
Copper is an infrastructure building block and a critical ingredient in green energy initiatives. Demand for copper is rising while supplies are struggling to keep pace.
Copper moves higher in January and February 2025
March COMEX copper futures prices reached the most recent low on January 2 at $4.0050 per pound.
The daily chart shows that the red nonferrous metal has held the $4 level in 2025 so far, making higher lows and higher highs. Copper rose to a new 2025 high on February 14 at $4.8365 per pound, 20.76% above the January 2 low.
The target is the May 2024 high
Copper’s bull market is now two decades old. The industrial metal broke above the 1988 $1.6475 high in 2005.
The quarterly continuous contract chart highlights higher lows and higher highs over the past twenty years. Copper futures rose to a record $5.1990 per pound high in May 2024, the upside target and technical resistance level. Technical support for the long-term bullish trend is the 2022 $3.1315 low.
Inventories can provide clues- Trade barriers distort prices
Copper inventories on the London Metals Exchange, the most liquid market for nonferrous metals, closed 2024 at 271,400 metric tons. On February 14, LME copper stocks were 5.95% lower at the 255,225-ton level.
Meanwhile, over the past months, copper inventories in U.S. copper warehouses have increased, indicating the flow of metal from Europe to the U.S. This trend could continue as the threat of Trump administration tariffs causes copper to continue to move from the London to the New York market.
Tariffs are trade barriers that can distort commodity prices as they create surpluses in some regions and shortages in others. U.S. tariffs on China could cause increased volatility in copper prices over the coming weeks and months.
The case for higher copper prices- China is critical
In a December 3, Barchart article on copper prices, I asked if $4 is a bottom for the red metal. I highlighted the bullish case for copper, outlining the following:
- Copper’s long-term decades long bullish trend remains firmly intact.
- Copper supplies are struggling to keep pace with the increasing global demand.
- Copper is a critical ingredient in alternative and renewable energy initiatives.
- Since 2001, every significant correction in the COMEX copper futures market and LME copper forwards market has been a buying opportunity.
I also pointed out that the copper market’s most bearish factor has been, “China is the world’s leading copper consumer, purchasing more than half the annual refined copper supplies. Chinese economic woes have weighed on worldwide copper demand.”
In late 2024, the Chinese government injected stimulus into its economy to promote growth. Lower interest rates and relaxed bank regulations could stabilize the economic woes in the world’s second-leading economy. Copper demand in 2025 and the potential for a new record high and continuation of the two-decade-old bull market could rely on Chinese copper demand. Meanwhile, U.S. tariffs on China could derail the government’s attempt to stimulate economic growth, as China depends on U.S. consumers for exports.
President Trump’s tariffs support his made-in-America agenda. However, they are also negotiating tools for dealing with global trading partners. If the U.S. and China can agree to a trading protocol that evens the playing field, it would likely benefit both economies, spurring Chinese economic growth and, in turn, copper demand. The bottom line is that the path of least resistance of copper prices over the coming months depends on China’s appetite for the nonferrous metal.
CPER is the copper ETF product
I remain bullish on copper and believe the pattern of higher lows and higher highs will continue. Buying copper on periodic corrective selloffs has been optimal since 2005.
The most direct routes for risk positions in copper are the COMEX futures and futures options, and the London Metal Exchange forwards and forward options. The U.S. Copper ETF product (CPER) tracks COMEX copper prices. At $29.27 per share, CPER had over $177.37 million in assets under management. CPER trades an average of over 126,000 shares daily and charges a 0.88% management fee. COMEX copper prices rose 20.76% from the January 2 low to the February 14 high.
The chart shows that over around the same period, CPER rose 20.24%, moving from $25.10 to $30.18 per share. The ETF does an excellent job tracking the futures prices, but it has one drawback. Copper trades around the clock, while CPER is only available during U.S. stock market hours. Therefore, the ETF can miss highs or lows during off-stock market hours.
Copper made a new record high in 2024, trading over the $5 per pound level for the first time. The recent price action suggests that copper could challenge that level in 2025. Chinese demand is crucial for the path of least resistance of the leading base metal over the coming months.
