Copper prices are projected to decline towards $8,500 per metric ton over the next four months, driven by expectations of weakened demand due to potential trade disruptions if Donald Trump returns to the White House in January, according to industry experts.
Current Market Status:
As of 0852 GMT, benchmark three-month copper on the London Metal Exchange (LME) was trading at $8,915 per ton, reflecting an 8% drop in less than ten days following Trump’s election victory.
Analyst Nicholas Snowdon from Mercuria Energy Trading highlighted concerns about the impact on economic growth stemming from anticipated trade policies under the new U.S. administration.
Supply and Demand Dynamics:
Near-term prices are pressured by inventory levels, with Snowdon forecasting a surplus of nearly 500,000 tons in Q1 2025 due to stockpiling during the Chinese New Year holiday and softening demand in Western markets.
Snowdon suggested that global cathode stocks could exceed 1 million tons by March.
Market Predictions:
Most traders, producers, and analysts surveyed at the annual copper industry gathering in Shanghai expect LME copper to potentially drop to $8,500 by the end of Q1 next year.
However, some participants anticipate prices to remain in the range of $9,000-$9,500 next year, citing similar market fundamentals.
Influence of the Dollar:
A strong U.S. dollar, bolstered by its status as a safe haven, is expected to make dollar-priced copper more expensive for holders of other currencies, further impacting demand.
Revised Forecasts:
Citi analysts recently adjusted their copper price forecast to $8,500 per ton within three months, down from $9,500, due to expected U.S. trade tariff increases and disappointing Chinese stimulus measures.
Despite this potential decline, analysts believe prices are unlikely to fall below $8,500, as buyers would likely seize the opportunity at that level, which remains over 20% below the historic high of $11,104.50 reached in May.
Long-Term Outlook:
Project Blue analyst Jonathan Barnes estimates LME copper prices could average between $9,300-$9,400 over the next three months, with a possible near-term dip to $8,500 as markets adjust to the implications of a Trump presidency.
Analysts anticipate that demand, especially from potential Chinese stimulus measures, will support prices in the longer term.
The copper market is also expected to face supply disruptions, with forecasts indicating a deficit ranging from 500,000 tons to over 1 million tons next year, leading smelters to reduce cathode output.
Future Projections:
The CRU forecasts a recovery in copper prices to $10,000 by the end of March 2025 and potentially reaching $15,000 by 2029, driven by energy transition demand and tightening mine supply.
Snowdon noted that while there are near-term risks for price declines, the structural demand story remains intact and is expected to gain traction in the latter half of next year.