Copper rises but remains trapped in a tight range ahead of 2025 uncertainty

LONDON: Copper prices rose in London on Tuesday supported by revived hopes for additional fiscal stimulus in top consumer China in thin pre-Christmas activity, and were on track into uncertain 2025 with a 5% gain in 2024.

Three-month copper on the London Metal Exchange (LME) gained 0.7% to $8,971.50 per metric ton by 1151 GMT. Copper, used in power and construction, is down 19% since May when a fund buying frenzy drove the price to a record high above $11,100 as unwinding of overly bullish investor positioning returned the focus to the present fundamentals - the global market surplus.

A strong dollar and the looming threat of import tariffs from US President-elect Donald Trump - which could trigger a trade war and hit economic growth and demand around the world - have kept copper in a tight price range since mid-November.

“Things will certainly heat up going into January as the new (Trump) administration takes office. With many of its policies still very much a ‘work-in-progress,’ market volatility should be considerably higher,” said Marex consultant Edward Meir. In China, healthy physical buying has been providing support to copper in recent weeks as indicated by declining metal inventories in warehouses monitored by the Shanghai Futures Exchange and a growth in Yangshan copper premium, currently at highest since mid-October.

Demand prospects in the world’s second largest economy got further support on Tuesday after sources told Reuters that Beijing planned to issue $411 billion worth of special treasury bonds next year. However, absent faster global growth and larger market surplus may push average copper prices to $8,650 in 2025 and $8,300 in 2026 before they rebound in 2027, according to analysts at Macquarie.

In other LME metals, aluminium gained 1.8% to $2,572.50 a ton after hitting $2,574, its highest since Dec. 16, due to 22% fall in available LME stocks. Zinc climbed 1.9% to $3,040.50, lead fell 0.1% to $1,984, tin was up 0.7% at $28,745, while nickel increased 1.5% to $15,510.