Copper retreats at year-end after 2025’s record rally

LONDON: Copper prices fell on Wednesday as some investors took profits in thin liquidity after a year-end rally drove the metal to a record high this week and set it on track for its biggest annual gain in 16 years.

Benchmark three-month copper on the London Metal Exchange lost 0.7% to $12,465 a metric ton in official open-outcry trading, having hit a record of $12,960 on Monday.

Copper, used in power and construction, has climbed 42% this year after mine disruptions added to concerns about tightened supply.

A weaker dollar, which makes dollar-denominated commodities cheaper for holders of other currencies, and buying by speculators anticipating surging demand from the AI boom and energy transition also drove the rally.

TARIFF DISLOCATIONS

With the LME index finishing the year at its highest since early 2022, this year’s turbulence has come from the markets navigating U.S. President Donald Trump’s tariff policy, which saw the U.S. imposing import tariffs on aluminium and created the threat of tariffs on copper from 2027.

Until the U.S. takes a decision on these tariffs in mid-2026, analysts expect the CME premium against the LME to continue attracting inflows to U.S. copper stocks, tightening availability of the metal in traditional consuming centres.

“I don’t see a reversal anytime soon, as these flows are largely driven by arbitrage and remain subject to U.S. policy, which is difficult to predict,” said Dan Smith, managing director at Commodity Market Analytics.

On the consumption side, seasonality will provide short-term support for copper as the first quarter tends to be supportive for the industrial cycle, with broad inventory build-ups ahead of summer, Smith said.

Demand in China, the world’s biggest metal consumer, remains higher than originally expected, with January-November imports down only 3% year-on-year, he added.

In other LME metals, aluminium rose 0.3% to $2,988 a ton in official activity, zinc fell 0.7% to $3,102, lead gained 0.2% to $2,006, tin slid 2.8% to $40,800 and nickel lost 1.2% to $16,625.