Copper Rally Continues as Trade Tensions Ease, Technical Indicators Turn Bullish

Copper futures rose nearly 1% to $4.70 per pound in early trading Monday as markets responded to easing US-China trade tensions. Trade representatives from both nations met in Switzerland over the weekend and reported substantial progress in negotiations.

A joint statement expected later today may outline initial agreements including potential tariff reductions. The weekend diplomatic breakthrough reversed April’s downward pressure when copper markets reacted negatively to fears of a global economic slowdown.

Robust ore production from South America had previously heightened oversupply concerns. Technical indicators show copper trading above its 100-day moving average of $4.61, signaling short-term bullish momentum.

The International Copper Study Group recently doubled its surplus forecast to 289,000 tonnes for 2025. This projection represents more than twice the 138,000-tonne surplus recorded last year.

Global mine production continues to expand, with output expected to increase by 2.3% to 23.5 million tonnes this year. Supply growth stems primarily from major operations ramping up production.

The Kamoa-Kakula mine in the Democratic Republic of Congo, Oyu Tolgoi in Mongolia, and the new Malmyz mine in Russia contribute significantly to increased output. Several smaller expansions across Brazil, Iran, Uzbekistan, and Ecuador further support production growth.

Technical analysis indicates copper faces resistance at $5.16 with a pivot point at $4.92. Support levels hold at $4.57, creating a defined trading range. The metal remains in an uptrend, trading above all major moving averages despite recent consolidation.

Year-to-date performance shows copper has gained approximately 17%, reflecting resilient demand despite production increases. The metal’s short-term outlook remains tied to today’s expected US-China trade announcement.

Trading Economics forecasts copper will reach $4.50 per pound by quarter-end before declining to $4.19 within twelve months. This projection aligns with the growing supply surplus and potential moderation in demand from construction sectors.

Shanghai’s copper market currently experiences its steepest backwardation in nearly two years. Prompt-month contracts command a $150/ton premium over three-month futures, reflecting immediate supply tightness despite longer-term surplus projections.

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