Copper has concluded a remarkable eight-day rally, its longest continuous rise since 2017, fueled by deepening concerns over global supply constraints and the looming threat of US import tariffs. The industrial metal surged 2.7% to settle at $12,558.50 per metric ton, capping off a year where futures have skyrocketed by more than 40%—the most significant annual gain since 2009.
Supply Chain Stress and Tariff Fears Fuel the Rally
The recent surge finds its roots in a combination of factors. A primary driver is the anticipation of potential US tariffs on copper imports, which has prompted traders to rush metal into the United States. This activity has tightened supplies available in other parts of the world. In November, Mercuria Energy Group Ltd. warned of an "extreme shortage" of copper outside the US by 2026, amplifying market anxieties.
Adding to the pressure, copper mining operations across the globe have faced significant disruptions. Accidents have plagued mines in key producing nations like Indonesia, Chile, and the Democratic Republic of the Congo. This year's supply issues have not been limited to copper; aluminum production is threatened by soaring energy costs and output limits in China, while zinc mining has also experienced disruptions.
A "Perfect Storm" of Macroeconomic Factors
Beyond supply, broader financial conditions have bolstered the metal's appeal. A weakening US dollar, which has lost approximately 8% of its value in 2025, has made dollar-priced commodities like copper cheaper for buyers holding other currencies. This dynamic has provided additional support to the price rally.
Natalie Scott-Gray, a senior metals analyst at StoneX Financial Ltd., describes the situation as a "perfect storm." She notes that for the coming months, copper will likely be driven by investor sentiment around potential US tariffs, with focus on regional stock levels and material flowing into the US, rather than underlying global fundamentals. While the premium for March copper futures on the Comex over London Metal Exchange contracts has eased recently, inventories in US warehouses continue to climb.
Record Highs and Broad-Based Metals Gains
The rally peaked earlier in the week, with copper hitting a record high just below the $13,000-per-ton mark on Monday before some profits were taken. The positive sentiment spilled over to other base metals as well. Nickel led gains across the London Metal Exchange after Indonesia, the world's top producer, indicated plans to reduce supply to support prices.
This sustained upward movement underscores a market grappling with a complex interplay of geopolitical policy, logistical bottlenecks, and production challenges. As 2025 draws to a close, the copper market remains highly sensitive to any developments regarding US trade policy and fresh supply-side news from major mining regions.
