Copper Nears Record as Trade Deal Hopes Revive Global Growth Bets

Copper prices are edging back toward record highs as optimism builds over a potential U.S.–China trade agreement, signaling renewed confidence in global growth and sustained tightness in supply. The move has reignited momentum across industrial metals, with copper (Zorrox: COPPER) once again at the center of the global macro narrative.

Trade Progress Lifts Copper

Three-month copper on the London Metal Exchange approached $11,000 per metric ton, its strongest level since mid-2024. Reports suggest Washington and Beijing are finalizing a trade framework to ease tariffs and restore manufacturing flows. COMEX futures mirrored the rally, extending a month-long gain of roughly 12 %.

Traders note that sentiment has shifted as both sides appear close to a coordinated deal addressing export controls and tech-sector supply chains. A formal accord would represent the most significant diplomatic thaw since the late-2010s trade war and could re-anchor global trade expectations for 2026.

With China consuming over half of the world’s refined copper, a modest rebound in its import demand could quickly ripple through markets. Combined with expectations of a softer U.S. dollar and fresh infrastructure commitments from both governments, investors see limited resistance to higher copper prices in the near term.

Supply Constraints Tighten the Market

The rally is also rooted in tight fundamentals. Mines in Chile and Peru—responsible for nearly 40 % of global output—continue to face energy shortages and labor unrest. Environmental reviews have delayed new projects, deepening the imbalance between supply and demand.

LME inventories remain critically low at roughly 90,000 tons, well below historical norms. Refined copper premiums in China have narrowed, a signal that buyers are securing contracts before prices climb further. Market participants warn that with inventories this thin, any shock—such as weather disruptions or export curbs—could accelerate price gains.

Longer term, structural demand from electrification remains unrelenting. Electric vehicles, grid modernization, and renewable energy build-outs have created a durable consumption floor that offsets cyclical slowdowns.

Macro Tailwinds Support the Move

The surge in copper coincides with easing inflation in developed economies and mounting speculation that the U.S. Federal Reserve will begin cutting rates in early 2026. A weaker dollar would make dollar-denominated metals more attractive for international buyers, amplifying the bullish bias.

Still, the sustainability of the rally depends on the pace of trade negotiations and confirmation of real industrial recovery. A stalled agreement or a sharp rebound in U.S. yields could trigger a correction.

Beijing’s next steps are also pivotal. Any renewed stimulus in construction or manufacturing could push physical demand even higher. Even incremental policy support could translate into noticeable import strength, given the market’s fragility.

Broader Market Ripples

Copper’s performance is being treated as a gauge of cyclical risk appetite. Equity markets across Asia and Latin America advanced in tandem, while mining stocks and industrial exporters outperformed. Gold softened slightly as investors rotated toward growth-linked commodities, and crude oil steadied after recent swings.

Analysts caution that sustained prices near record levels could pressure manufacturers—particularly in Europe, where margins remain thin. Persistent highs might prompt substitution toward aluminum or scrap metals, tempering the pace of gains. Nonetheless, the consensus among traders is clear: copper’s structural story remains bullish, driven by policy momentum and real-world scarcity.

Tips for Traders

• Follow U.S.–China negotiations closely; confirmation of a deal could ignite another breakout in copper (Zorrox: COPPER).

• Track LME and COMEX inventory levels—further drawdowns signal deepening tightness.

• Watch U.S. dollar trends and Treasury yields; a weaker dollar typically boosts industrial metals.

• Keep an eye on China’s construction and manufacturing data for real demand confirmation.

• Use cautious hedging as copper approaches resistance levels—volatility tends to spike near records.