Copper Market Retreats Amid Supply Concerns and Global Economic Slowdown

Copper prices slipped to $4.54 per pound Friday morning, extending Thursday’s decline when futures hit a near one-month low of $4.55.

London Metal Exchange settlements reflected this weakness, with cash prices falling to $9,413 per tonne on May 8 from $9,486 the previous day. This downward momentum comes despite steadily decreasing LME warehouse stocks, which dropped to 194,275 tonnes.

Manufacturing weakness stands at the forefront of copper’s recent struggles. PMI readings across China, the United States, and Europe show contracting factory activity, dampening demand prospects for industrial metals.

The International Copper Study Group recently doubled its 2025 surplus forecast to nearly 300,000 tonnes, signaling mounting oversupply concerns. Chinese traders have accelerated this trend by closing long positions on U.S. copper futures initially opened after tariff speculation.

Metal flows increasingly divert toward American warehouses as market participants hedge against potential future levies. The February 2025 executive order investigating copper imports as a national security risk continues to create market uncertainty.

Technical indicators paint a predominantly bearish picture. Current RSI readings of 30.44 signal downward momentum while multiple oscillators register oversold conditions.

The ADX reading of 72.86 confirms an exceptionally strong trend direction currently dominating market activity. Market structure reveals growing regional disparities impacting pricing dynamics.

Shanghai Futures Exchange copper inventories have plummeted 60% month-over-month, creating significant backwardation in Chinese markets. This contrasts sharply with building U.S. stockpiles, which have surged 61% since March to 156,623 tons.

Longer-term fundamentals still support higher prices despite current weakness. The clean energy transition drives structural demand growth, with electric vehicles requiring four times more copper than conventional cars.

AI data centers add another consumption layer, with Trafigura projecting they will require an additional million metric tons annually by 2030. Investment flows reflect this optimistic long-view despite recent volatility.

The United States Copper Index Fund has gained 30% year-to-date, while the USCF Daily Target 2X Copper ETF jumped 45% since its January launch. Production constraints further underpin bullish structural arguments.

Declining ore grades limit output growth potential to just 1.2% annually through 2026 against projected demand growth of 3.5%. The International Energy Forum estimates 194 new copper mines must be developed by 2050 to prevent severe shortages.

Goldman Sachs analysts maintain their positive outlook despite near-term challenges. They recently increased their Q2 2025 price projection to $9,330 per tonne from $8,620.

The revision is based on expected supply deficits starting in 2026. For today’s session, traders expect copper to trade between $4.54 and $4.73, with momentum favoring continued consolidation.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error

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