Copper Slides to $4.81 as Dollar Strength Counters China Stimulus Hopes

Trading data from CAPITAL.COM shows copper futures declining to $4.81 per pound on Tuesday morning, retreating from Monday’s $4.89 level amid conflicting market forces.

The red metal faces pressure from a strengthening US dollar while Chinese stimulus measures provide underlying support. London Metal Exchange cash settlement reached $9,595 per metric ton by May 23, with three-month futures at $9,570.

Technical indicators reveal market consolidation patterns established over the weekend. The Ichimoku Cloud places prices above the formation, suggesting bullish undertones despite recent weakness.

However, flat momentum signals limited upward pressure in near-term trading. LME copper stocks stand at 164,725 metric tons, continuing a declining trend from previous weeks. This inventory drawdown reflects ongoing supply tightness in global markets.

Traders moved inventories to US exchanges amid tariff uncertainties, boosting COMEX stocks while narrowing the traditional London-New York spread. Shanghai Futures Exchange activity shows steady Chinese demand patterns anchoring price levels.

China’s massive stimulus package totaling 3.95 trillion yuan ($560 billion) supports market sentiment. The package represents over 3% of China’s GDP and approaches COVID-era support levels.

However, copper’s gains remain constrained by dollar strength making the metal expensive for international buyers. Commodity ETFs recorded outflows of $426 million for the week ended May 14, indicating profit-taking activity across the complex.

Trading volumes remain subdued during the current consolidation phase. Supply fundamentals point to tighter markets ahead. Chilean production disruptions earlier this year reduced global availability while infrastructure demand from China holds firm.

Copper Faces Structural Deficits Amid Electrification

The International Energy Agency projects a 6.5 million-ton copper shortfall by 2035. Goldman Sachs maintains price targets between $5.00-$5.50, projecting deficits of 180,000 tons in 2025 expanding to 250,000 tons in 2026.

Other major banks raised forecasts with Commerzbank targeting $5.00 and Bank of America seeing $4.50-$5.25 ranges. Global copper mine output reached 22.9 million tonnes in 2024, marking 3.2% growth.

Despite production increases, markets face supply constraints as mining grades decline and new project approvals slow. Defense spending increases drive copper demand growth of 15-18% annually for military applications.

Electric vehicle and renewable energy sectors provide additional demand support for long-term market tightness. SMM spot pricing for copper cathode averaged $9,659-$9,679 per metric ton on May 26, with premiums ranging from $18.46 to $27.07.

Asian overnight sessions showed minimal price movement as markets opened stable. The copper market enters a critical phase where supply constraints meet demand growth from electrification trends.

Near-term price action remains hostage to macroeconomic developments and dollar movements while underlying fundamentals support higher valuations.

Market participants await clarity on trade policies and Chinese economic data to determine direction beyond current consolidation levels.

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