Copper, the essential metal powering the global shift to renewable energy, is heading for its most significant annual price increase in more than fifteen years. Traders are driving the surge amid deepening concerns over potential worldwide shortages of the industrial commodity.
A Perfect Storm for Prices
The value of copper has skyrocketed by more than 35% since the start of the year. This dramatic rise is attributed to a confluence of factors. Uncertainty surrounding US trade policy, including former President Donald Trump's threats of extra import tariffs, prompted a wave of stockpiling by American companies earlier in 2024. Although those tariffs were suspended, the hoarding effect tightened supplies globally.
Further pressure has come from supply-side anxieties. Recent mining disasters, such as a fatal mudslide at the massive Grasberg copper and gold mine in Indonesia operated by Freeport-McMoRan, have forced production shutdowns. In September, the US miner warned it would be unable to fulfil customer contracts as a result.
Copper Joins the Safe Haven Club
Analysts note that copper is now being viewed alongside traditional safe-haven assets like gold and silver. Investors are increasingly seeking tangible assets with limited supply to hedge against a falling US dollar and broader economic uncertainty.
Gold has jumped above $4,400 an ounce, a rise of over 70% since January, while silver hit a record high on Monday. This rally boosted the value of London-listed Mexican miner Fresnillo to a record this month. Kyle Rodda, senior market analyst at Capital.com, stated the rises "demonstrate a world marked by greater scarcity and investors' desire to get their hands on things with relatively limited supply."
Green Demand and Geopolitical Moves
The long-term demand outlook for copper is intensely bullish, underpinned by its central role in the "electrification of everything." It is critical for power grids, electric vehicles, wind turbines, and solar farms. As nations accelerate their transition from fossil fuels, copper demand is expected to outstrip supply for decades.
China, the world's largest manufacturer of copper products, is aggressively securing resources. On Christmas Day, state-owned Jiangxi Copper completed a $1.2 billion acquisition of London-listed miner SolGold, gaining control of the Cascabel gold and silver operation in Ecuador.
Despite some analysts, like those at Goldman Sachs, suggesting prices may stabilise due to sufficient immediate supply, the dominant market narrative focuses on scarcity. The combination of strategic stockpiling, soaring green energy demand, and supply disruptions paints a picture of a metal whose strategic importance—and price—will only continue to climb.
