Copper prices are approaching historical highs, driven by easing trade tensions and supply disruptions boosting the market

Global trade easing injects new momentum into copper price rise.

On October 27, according to CCTV News, Chinese Foreign Ministry spokesperson Guo Jia Kun stated that the economic and trade consultations between China and the United States are guided by the important consensus of the two heads of state, and have conducted candid, in-depth, and constructive exchanges on important economic and trade issues of mutual concern, reaching a basic consensus on arrangements to address each other's concerns.

Previously, production disruptions from South America to Indonesia have intensified market concerns about supply. On Monday, copper prices on the London Metal Exchange rose by 1.2% to USD 11,094 per ton, just about USD 10 shy of the historical high set in May 2024, before the gains narrowed.

(London copper briefly rose to USD 11,094 per ton)

Supply disruptions combined with a weak dollar push up copper prices

In recent months, a series of major mining accidents have continuously driven up copper prices. Wall Street Insight has previously mentioned:

• In May, Ivanhoe Mines in the Democratic Republic of Congo's Kamoa-Kakula mining area repeatedly suspended operations due to seismic activity, while also withdrawing its performance guidance related to the mining area for 2025.
• In August, a rockburst incident occurred at the largest mine of Codelco, the Chilean state-owned copper company.
• In September, a large-scale fatal mudslide occurred at Freeport McMoRan's Grasberg mine in Indonesia. Following the incident, the company lowered its copper sales expectations for this giant mine.

Analysts believe that these production disruptions have, to some extent, triggered market concerns about future supply.

In the long term, the demand outlook for copper remains strong, constituting a structural factor supporting its price. The world's largest mining company, BHP Group, predicts that global copper demand will increase by about 70% by 2050.

As a key material for wires, batteries, and pipes, copper plays an indispensable role in the global electrification process.

In the face of numerous uncertainties on the supply side, this strong long-term demand expectation makes the supply-demand balance in the copper market particularly fragile, explaining why prices are so sensitive to various disruptive information In addition to the impact of supply and demand, the decline of the US dollar this year has also created a favorable environment for copper prices to rise.

Since January 2025, the US dollar index has fallen nearly 9% as investors bet that the Federal Reserve will further cut interest rates.

(The US dollar index has accumulated a 9% decline this year)

The depreciation of the US dollar makes commodities priced in dollars more attractive to buyers holding other currencies. At the same time, the market's expectation that interest rate cuts will stimulate economic growth has also boosted the raw materials market