Copper’s Rally Defies Weak Demand as Speculation and Supply Squeeze Drive Prices Higher

Copper prices surged to their highest levels since March, closing a volatile 24-hour period marked by a sharp disconnect between price action and physical demand.

According to Shanghai Metal Market data from June 26, copper gained 3.2% week-on-week, trading above $5.17 per pound on major futures exchanges during early June 27 sessions.

This rally unfolded even as physical transaction volumes dropped 17% across key Chinese hubs, exposing a market increasingly driven by speculative flows and supply-side anxieties. Charts from the last 24 hours reveal a decisive technical breakout.

On the four-hour chart, copper prices pierced upper Bollinger Bands and held above all major moving averages, signaling strong upward momentum. The MACD indicator shows a wide bullish gap, while the RSI sits at 72, flagging overbought conditions.

On the daily chart, the rally appears even more pronounced: prices accelerated above resistance at $5.07, with the MACD histogram expanding and the RSI at 66, confirming sustained bullish sentiment.

Both charts confirm that the move was supported by rising volumes, validating the breakout. Fundamentally, the rally’s roots lie in a tightening global supply chain and market distortions from anticipated US tariffs.

Goldman Sachs raised its copper price forecast for the second half of 2025, now projecting an average of $9,890 per tonne and a peak of $10,050 in August.

This revision follows a dramatic drawdown in London Metal Exchange inventories, which have fallen 80% this year to less than a day’s global usage.

The US market, bracing for possible 25% import levies, saw a 3% price jump and a record $1,500 per tonne premium over LME prices as buyers rushed to secure supply.

Copper Prices Rise on Tight Supply

Despite these price gains, end-user demand remains weak, especially in North China, where buyers hesitate at elevated prices and transaction volumes lag.

Shanghai spot premiums have widened to ¥420 per tonne over LME cash, while North China’s have narrowed to ¥280, reflecting regional imbalances and logistical bottlenecks.

Warehouses in Guangdong operate at just 68% of normal activity, with many traders holding inventory in anticipation of further price increases rather than for immediate industrial use.

ETF flows reflect this speculative tilt. The Sprott Copper Miners ETF, which began adding physical copper exposure on June 23, saw steady inflows as investors sought to capitalize on the rally.

Open interest in copper futures has expanded, further highlighting the speculative character of the current market. Macroeconomic factors offer little relief.

While a softer US dollar and continued infrastructure spending support prices, the underlying story remains one of tight supply meeting tepid demand.

The technical picture now signals potential for short-term consolidation, given overbought readings, but the broader trend remains upward as long as supply constraints persist and speculative interest stays high.

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