Copper has an array of uses ranging from electric vehicles (EVs) to the electrical grid, appliances, and renewable energy. Besides, its unique properties make it a crucial component in the infrastructure and construction sectors.
In the short term, the US-China trade war has impacted investor confidence even as the recorded decline in the US dollar offers some support. At the time of writing, COMEX copper futures were $4.3795 per pound as it traded in the green for the third session in a row.
In a broader scale, the expansion of China’s manufacturing activity and heightened domestic consumption is set to bolster copper demand and prices. Besides, the world is moving steadily towards the net zero goal of 2050.
The EV industry in China and the world is already booming; pumping copper’s status as “the new oil”. As such, the red metal is set to rise above the current uncertainties to record significant gains in the medium to long term.
Copper price set to surge amidst the economic uncertainties
China announces retaliatory measures to Trump’s tariffs
China is the leading importer and consumer of copper; accounting for over 50% of the commodity’s global demand. As such, the country’s economic health is crucial in the red metal’s short and long-term outlook.
On the one hand, uncertainties over the macroeconomic environment at the national and global level continue to weigh on copper price. To begin with, the market’s participants are concerned over the probable impacts of President Trump’s recently imposed tariffs.
Late last week, the US President made true his threats to impose hefty tariffs on its top trade partners. However, after lengthy talks with Canada and Mexico leaders, he has halted the planned 25% levies on goods from these two neighbors. Even so, the 10% tariff on Chinese goods entering the US took effect on Tuesday.
In turn, China has retaliated by announcing 15% tariff on an array of US imports including LNG, coal, and agricultural equipment. This is in addition to conducting an antitrust investigation on Google and blacklisting two US firms.
Chinese tariffs are higher than the 10% imposed by the US government. The Asian country is sending a strong message to its key trade partner that it has a large menu of retaliatory measures that could hurt the US.
However, its focus is on sustaining a mutually beneficial relationship as opposed to a tit-for-tat. In fact, China’s measures will not be in effect until 10th February. This gives the two country’s time to reach a deal.
Economic indicators point to a surge in copper demand and prices
Even with these macroeconomic uncertainties, copper demand and prices are set to boom in coming months. Indeed, several indicators substantiate this bullish outlook.
To start with, the Caixin’s China manufacturing PMI data released earlier in the week pointed to the expansion of manufacturing activity in the country for the fourth month in a row. According to thi private gauge, new orders and production both grew in January. However, with many businesses halting operations for the Lunar New Year holiday, the PMI slightly dropped from 50.5 in December 2024 to 50.1 in January 2025.
Besides, China continues to dominate the EV industry. Indeed, about 80% of the EVs sold worldwide in 2024 were made in China. At the same time,more than 50% of the cars sold in this Asian country last year were EVs. The nation also accounts for about three-quarters of the world’s manufacturing capacity for battery cells.
As the world steadily moves towards the net zero goal by 2050, the demand for electric vehicles is set to increase. According to Rho Motion, EV sales in 2025 are projected to rise by 17% in China and 18% at the global level. Besides, China is keen on bolstering domestic consumption; an approach that will further boost copper demand and prices.
With copper demand already on the rise, the world’s top producer of the red metal recorded a surge in the past year. As highlighted by Reuters, copper production at Codelco in Chile rose from 1.325 million tonnes in 2023 to 1.328 million tonnes in 2024.
Read more: Hang Seng index forms a bullish pattern after strong China GDP data
Copper price forecast
The daily chart shows that copper price has rebounded in the past few weeks. It has moved and retested the upper side of the symmetrical triangle. It formed an inverse head and shoulders pattern, a popular bullish sign.
Copper has also jumped above the 50-day moving average, while the Relative Strength Index (RSI) has continued rising. Therefore, it will likely rebound and retest the key support at $5 in the coming weeks.
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