In 2025, copper prices showed a fluctuating trend, with particularly impressive performance in the first quarter: COMEX copper futures prices broke historical records on March 26, with the largest increase of over 28% during the year; The maximum increase in LME 3-month copper futures price exceeded 13%; The active copper futures contract on the Shanghai Futures Exchange rose by over 12%. This round of rise is mainly driven by the resonance of tight copper mine supply, inventory transfer caused by tariff policies, and seasonal demand recovery.
The pricing logic of copper prices in 2025 has shifted from macro led to supply and demand driven fundamentals. On the supply side, new copper mining projects are scarce globally, with 17 leading mining companies experiencing an annual production growth rate of only 2.2%, resulting in tight supply and demand for copper concentrate. The combination of issues such as declining mine grade and mining interference, such as the continuous impact of the shutdown of the Kobre Panama copper mine in Canada on output expectations. The shortage of mining resources has led to a decrease in copper concentrate processing fees. On March 28th, the processing fees for imported bulk TC fell below -20 US dollars per ton, putting pressure on the profits of smelting enterprises. Some plans are to reduce production.
On the demand side, global refined copper consumption is steadily increasing. The core support formed by the increase in the penetration rate of power infrastructure and new energy vehicles has offset the demand drag in the real estate sector. China, as the largest consumer country, saw a 13% increase in investment from State Grid, driving demand recovery; The US manufacturing return policy has also boosted copper consumption. In addition, the copper consumption of AI data centers has increased by 30% compared to traditional servers, and post-war reconstruction in Ukraine and other regions has also brought one-time demand.
At the macro level, the US economy has shown signs of slowing down due to policy shocks, and the risk of stagflation still exists. However, the copper gold ratio has dropped to a historical low of 3.08, indicating room for further inflation. If the expectation of the Federal Reserve's interest rate cut in 2025 is implemented, it will provide support for copper prices denominated in US dollars.
Overall, copper prices may fluctuate upwards in the medium to long term in 2025, but we need to be cautious of uncertainty: the resumption of copper production in Panama and the easing of the conflict in the Democratic Republic of Congo may alleviate supply pressure; If the rebound in US inflation compresses the room for interest rate cuts, it may curb the rise in copper prices.
