Copper demand may remain under pressure as trade tensions between America and China persist, dampening market optimism for the metal. Analysts warn that the ongoing dispute between the two largest economies in the world will continue fueling uncertainty, which will in turn weigh on investor confidence and global growth prospects.
Research firm BMI has revised its 2025 average price forecast for the metal to $9500 per ton, a bearish outlook, citing some of the factors behind this revision as China’s struggling property sector where declining sales, investments, and prices are contributing to decreased industrial activity.
ING Think shares this cautious stance, noting that a drawn-out trade war would negatively impact consumer confidence, burden demand for raw materials, and weaken investors’ appetite for risk.
In the recent months, however, the metal has shown some resilience. Last month, the price of copper hit $10,112 after it was revealed that it’d be targeted by tariffs imposed by Trump, which triggered a surge in buying. While a slowdown in major markets has put some pressure on the metal, copper has still managed to perform relatively well, with its 3-month copper contract on the London Metal Exchange hitting $9271.50 a ton.
According to Australia’s Office of the Chief Economist, the price of the red metal has risen by 11% since the year began, largely fueled by strong demand from both America and China. The office expects that the price will average $9570 per ton this year, a figure that seems attainable given that its price average as of last week stood at $9385 a ton.
Some optimism remains in the market, particularly as expectations build around the introduction of stimulus measures by China.
ING Think suggests that aggressive fiscal action by China could minimize potential negative impact to industrial metals like copper while cushioning the impact of the property sector. In addition, continued urbanization, the growth of data centers, and increasing investments in low-emission technologies are expected to boost long-term consumption of copper.
Meanwhile, the possibility of America imposing metal-specific tariffs on the metal, justified on national security grounds, has increased the premium of American copper futures over London contracts.
Still, analysts at BMI emphasize that persistent uncertainty in trade policies will continue applying downside pressure on economic growth globally. They note that recovery for copper demand may likely depend on potential reduction of rates by the U.S. Federal Reserve and improved trade relations, which could support commodity prices but weaken the dollar.
The current headwinds facing the copper market are unlikely to faze industry actors like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) since the long term outlook remains positive for this metal.
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