Copper Stabilizes at $4.35 After Historic Volatility Amid Escalating Trade Conflict

Copper prices are stabilizing this morning after experiencing extreme volatility in recent days, with CFDs trading at $4.35193 as of 06:57 UTC, representing a slight decline of 0.27%.

This follows one of the most turbulent trading periods for the industrial metal in years, as global markets continue to react to escalating trade tensions. The red metal is holding above the psychological $4.30 level after experiencing a dramatic roller-coaster in yesterday’s session.

London Metal Exchange (LME) three-month copper contracts rebounded to around $8,780 per tonne after briefly plummeting below $8,500. Most notably, copper staged a remarkable $1,000 recovery within just two hours on Monday – the largest intraday move since 2009.

Trading volumes reached exceptional levels, with copper volumes on the LME in the second hour of Monday’s trading reaching their highest levels of any hour since Donald Trump’s election in 2016.

What Triggered the Volatility?

The recent price action stems directly from the escalating global trade tensions. What began as a promising rally turned into a full-blown crash following President Trump’s announcement of “reciprocal tariffs” applying to all countries.

China’s subsequent announcement of a 34% tariff on all US imports starting April 10 further exacerbated market fears.

Sabrin Chowdhury, head of commodities at BMI, a Fitch Solutions unit, noted: “Metals are under significant pressure from dampened sentiment as the world braces for a possible recession and heightened geopolitical tensions that would threaten demand”.

Chinese Buyers Seize Opportunity

A key factor in yesterday’s dramatic price recovery was opportunistic buying from China. Chinese copper buyers used Monday’s collapse in prices below $8,500 a ton to significantly increase purchases, according to traders familiar with the matter. This surge in buying helped trigger the remarkable rebound even as other global markets continued to decline.

Outlook from Major Producers

Chile, the world’s largest copper producer, has taken a cautious stance. The country’s state copper commission, Cochilco, announced on Monday that copper prices have likely reached their peak for 2025 amid the worsening trade conflict.

“It is anticipated that base metals, copper included, may have peaked in 2025 due to negative repercussions from the trade tensions between the U.S. and China,” Cochilco stated in their release.

The commission still projects average copper prices to remain above $4 per pound throughout this year but warned that forecasts could be downgraded if current economic and geopolitical conditions persist.

Impact on Mining Stocks

The copper price turbulence has severely impacted mining companies globally. Major players like Freeport-McMoRan saw shares drop 13.1% in a single day on Friday, bringing its weekly loss to 24.1%.

Similarly, BHP Group fell 9.5%, Rio Tinto dropped 6.4%, and Glencore plunged 11.5%. Canadian copper miners including Teck Resources, Ivanhoe Mines, and First Quantum all experienced double-digit percentage declines as investors pulled back across the sector.

Technical Analysis

From a technical perspective, copper appears to be consolidating after the extreme volatility. The hourly chart shows resistance around the $4.40-$4.43 level, with support established near $4.32-$4.30.

The rapid sell-off and subsequent bounce has created a potential short-term bottom, though traders remain cautious given the broader macroeconomic uncertainties.

Gold Market Correlation

While copper has struggled, gold has demonstrated its traditional safe-haven role, though not without volatility. Gold prices edged higher to $2,990.48 an ounce this morning, up 0.3% from yesterday, when it hit its lowest level since mid-March.

Unlike copper, gold ETFs have seen substantial inflows, with the sector absorbing $7.4 billion last month and $11.0 billion in the first quarter of 2025. SPDR Gold Shares (GLD) soared 19.2% in the first quarter and 40.1% over the 12 months through March.

Economic Implications

The copper market’s volatility reflects broader concerns about global economic health. JPMorgan now expects the US to fall into a recession this year, while UBS estimates that every 1% drop in US GDP could cut output in export-driven Asian economies like Taiwan and South Korea by up to 2%.

Juan Ignacio Guzman, head of Chilean mineral consulting firm GEM, offered a stark warning: “If the trade war triggers a recession, prices could tumble to as low as $3 a pound — or about $6,600 a ton”.

Looking Ahead

Market participants will be closely monitoring upcoming economic data releases, particularly US inflation figures due later this week. The US Consumer Price Index data (Thursday) and Producer Price Index (Friday) will provide crucial signals about potential Federal Reserve rate cuts amid escalating global trade war and recession fears.

As trade tensions continue to evolve, with Trump threatening an additional 50% tariff on China if they don’t lift their 34% tariff on US goods, copper prices are likely to remain highly sensitive to geopolitical developments in the near term.

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