Copper Market Faces Volatility and Uncertainty in 2025

Copper

The U.S. copper market is poised for continued volatility in 2025, influenced by Chinese demand trends, electric vehicle (EV) rollouts, and shifting U.S. monetary policy. Copper prices surged in mid-2024, reaching a record high of $5.106/lb on May 21, before retreating to an average of $4.33/lb in the second half of the year.

Market participants expect these factors, along with potential import tariffs under President-elect Donald Trump, to shape price movements throughout 2025. Trade tensions, interest rate decisions, and inflationary pressures will further add to the market’s uncertainty.

Macroeconomic Pressures and Strong Dollar Impact

A strong U.S. dollar and Federal Reserve policy shifts remain key concerns for copper traders. The DXY dollar index surged to 108.2 on December 19, the highest since November 2022, following signals from the Federal Reserve that interest rate cuts in 2025 may be limited to 50 basis points rather than the previously expected 100 basis points.

A stronger dollar generally weakens copper demand, making the metal more expensive for holders of other currencies. Additionally, tariffs and inflationary pressures could force the Fed to slow rate cuts or even increase interest rates, further strengthening the dollar and weighing on copper prices.

Trade policy uncertainty remains a major factor, as Trump’s proposed import tariffs could prompt retaliatory measures, raising costs and curbing global copper demand.

EV Market Uncertainty Weighs on Copper Demand

While the renewable energy sector—including wind and solar projects—is expected to support copper demand, the EV sector faces growth concerns. Automakers such as GM, Ford, and Toyota have delayed full EV rollouts, opting to shift toward hybrids.

Each EV requires approximately 183 lbs of copper, nearly four times more than a traditional internal combustion engine (ICE) vehicle. A slower EV adoption rate could dampen near-term copper demand growth, despite the long-term outlook remaining strong.

Diverging Copper Price Forecasts for 2025

Market analysts are split on copper’s 2025 price outlook, though most agree that the market will likely enter a deficit by 2026 due to growing renewable energy demand.

• Goldman Sachs forecasts $4.61/lb in 2025, citing potential stimulus-driven upside risks and trade-related downside risks.

• Citigroup projects a lower $3.97/lb, while Bank of America estimates $4.28/lb.

• UBS predicts a range of $4.76-$4.99/lb, signaling a bullish outlook compared to other institutions.

With geopolitical uncertainties, currency fluctuations, and shifting industrial demand, 2025 is shaping up to be a pivotal transition year for the copper market.