Copper has concluded a remarkable year, registering its most significant annual price increase since 2009. The red metal's impressive rally was powered by immediate supply constraints and strong investor confidence that future demand, particularly for electrification, will consistently exceed production.
A Year of Record Highs and Market Volatility
The industrial metal enjoyed a powerful end-of-year surge, achieving a series of unprecedented price peaks. On the London Metal Exchange (LME), copper prices climbed an impressive 42% over the course of 2025, outperforming the five other major industrial metals traded on the exchange. The final trading day of the year, Wednesday, December 31, saw a slight correction with prices dipping by 1.1%, settling at $12,558.50 per metric ton. This followed a record high of $12,960 reached just days earlier on Monday.
Key Drivers: Tariff Fears and Supply Shocks
Several critical factors converged to create a perfect storm for copper prices. A significant driver has been the movement of metal into the United States, as traders anticipate potential import tariffs in 2026. More than 650,000 tons of copper have entered the US, creating a noticeable tightness in supply outside American borders. Natalie Scott-Gray, a senior metals analyst at StoneX Financial Ltd., highlighted that this flow has resulted in two-thirds of the world's visible copper stocks now being held within the COMEX exchange system.
Compounding these trade flows were severe operational disruptions at major mines globally. A deadly accident at the Grasberg mine in Indonesia (the world's second-largest copper operation), an underground flood in the Democratic Republic of Congo, and a fatal rock blast at a Chilean mine all placed additional strain on the already tight supply chain.
The China Conundrum and Long-Term Green Demand
The near-term demand outlook presents a mixed picture, primarily due to continued economic softness in China, the globe's top copper consumer. A prolonged downturn in the Chinese property sector has reduced demand for copper used in plumbing and wiring, while sluggish consumer spending has dampened appetite for copper-containing goods like electronics.
However, analysts remain overwhelmingly bullish on copper's long-term trajectory. The fundamental shift towards cleaner energy is a powerful, structural driver. BloombergNEF estimates that global copper consumption could rise by more than one-third by 2035 in its baseline scenario. This growth will be fueled by the massive global rollout of solar panels, wind turbines, electric vehicles, and the necessary expansion of power grids—all of which are heavily reliant on copper.
In summary, while immediate Chinese demand presents headwinds, the combined forces of pre-emptive trade movements, acute supply disruptions, and the irreversible global trend toward electrification have positioned copper for a strong future, as vividly demonstrated by its stellar performance in 2025.
