FX.co ★ Copper Pulls Back Amid Market Caution

Copper futures have settled at approximately $5.4 per pound, a slight pullback from a recent peak following a sustained surge over several months. Analysts have pointed out that demand remains relatively subdued beyond sectors such as electric vehicles, artificial intelligence, and renewable infrastructure. Nonetheless, the metal is on course for its most significant annual rise since 2009, with a notable increase of approximately 36.7% this year, mainly driven by supply concerns. Various factors have tightened the global supply of copper concentrate, including operational disruptions at major mines in Chile and Peru, output delays in Indonesia that have reduced production by 8% to 12%, and a dearth of new project development. Further emphasizing the supply crunch, Chinese smelters have agreed to zero treatment and refining charges for 2026, the lowest on record, which enhances miners' bargaining power in negotiations. Robust demand persists for electric vehicles, AI data centers, and the expansion of power grids, with Goldman Sachs forecasting that over 60% of copper demand growth will be driven by these sectors through 2030. Additionally, pre-emptive stockpiling sparked by U.S. tariffs on copper imports has led to record inventory levels in the United States.