Copper Market Defies Economic Gloom as Tight Supply and Chinese Demand Drive Prices

Copper prices held firm on May 7, 2025, with CFDs trading near $4.72 per pound after reaching $4.74 earlier in the session.

Data from TradingView and market sources confirm that copper has gained over 8% since the start of the year, even as global equities, including the S&P 500, have fallen more than 4%. This divergence highlights copper’s unique position in the current economic landscape.

The story behind copper’s resilience starts with physical market tightness. Both the London Metal Exchange and the Shanghai Futures Exchange have reported sharp inventory declines in 2025.

LME stocks dropped by 62% in six months, while Shanghai inventories fell 45% year-to-date. These drawdowns signal robust demand outpacing available supply, a pattern that historically precedes multi-year bull markets for copper.

Despite these bullish signals, the broader economic context remains challenging. Global growth forecasts have been revised downward. Trade tensions between the US and China remain unresolved, and Chinese factory activity has contracted to its lowest level in over a year.

New export orders from China have also dropped to their lowest point since 2022. These factors typically weigh on copper, which often serves as a bellwether for global industrial health.

However, the physical copper market tells a different story. Morgan Stanley analysts recently noted that “the physical copper market looks tight despite global economic concerns.”

The LME saw its highest hourly trading volume in nearly a decade as prices rebounded sharply to $9,551.50 per metric ton. This surge in activity reflects extraordinary interest from major market participants, even as economic headwinds persist.

Copper Market Analysis

Technical analysis supports the view of ongoing volatility. The hourly copper chart shows the price hovering below the 200-hour moving average, with sideways movement dominating recent sessions.

Bollinger Bands indicate increased volatility, while the RSI sits near neutral, suggesting a lack of clear momentum in either direction. Analysts expect the trading range today to remain between $4.60 and $4.81, with a bullish bias if support holds above $4.54.

Despite the current strength, warning signs suggest the rally may not last. Rising copper prices have already reduced purchasing enthusiasm among Chinese processors.

Industry experts, including Wei Lai of Zijin Mining, expect demand growth in China to slow in the second half of 2025. Historical patterns also raise caution: copper often lags equity markets during downturns, and price elasticity could reduce consumption at these elevated levels.

ETF flows show modest net inflows, reflecting cautious optimism. Market participants are watching today’s US ISM manufacturing data and upcoming Chinese trade figures for fresh demand cues.

The market’s core narrative remains clear: tight supply and strong Chinese demand have driven copper’s outperformance, but sustainability depends on whether structural trends can withstand cyclical economic weakness.