Why copper prices rise and fall: the factors that move the market

Why copper is the most watched metal

Copper conducts electricity better than any other industrial metal at an affordable cost: cables, motor and transformer windings, connectors, tubes, heat exchangers. More than half of world consumption goes into electrical and electronic uses, the rest into construction, transport, machinery and consumer goods. That is why its price is read as a thermometer of the real economy — the nickname "Dr Copper" comes from here — and why every phase of industrialisation or electrification puts it centre stage.

The market is large but concentrated: a few tens of millions of tonnes of refined copper a year, with China alone accounting for more than half of demand and mine supply dominated by Chile, the Democratic Republic of Congo and Peru. A concentration that makes the price sensitive to what happens in a handful of places.

Who sets the price: LME, COMEX and SHFE

The world reference price is that of the London Metal Exchange: grade A cathodes, 25-tonne lots, quoted in US dollars per tonne, delivered in the exchange's approved warehouses. Physical contracts all over the world are written on the LME price — cash and three-month, Official and Closing — plus the premium for physical delivery in the place and form required.

COMEX in New York quotes copper in dollars per pound (a tonne is 2,204.6 pounds) and is the North American reference market; the Shanghai Futures Exchange quotes in yuan per tonne, VAT included, and mirrors Chinese demand. In normal conditions arbitrage keeps the three prices aligned, net of exchange rates, logistics and taxes. When something stops metal from moving — tariffs, restrictions, warehouse queues — the prices separate and the gap itself becomes news.

Supply: mines, concentrates, refineries

Copper is a slow metal on the supply side. Between the discovery of a deposit and first production more than fifteen years pass on average, between permits, financing and construction; average ore grades have been falling for decades, so more rock, more energy and more water are needed for the same tonne of metal; and the big mines of Chile, Peru, Congo, Indonesia and Panama have shown how much strikes, accidents, droughts and political decisions weigh on actual volumes.

The most recent bottleneck is mid-chain: concentrates. Smelters, above all Chinese ones, have added capacity faster than mines, and competition for concentrate pushed treatment and refining charges (TC/RCs) — what a smelter earns for processing the ore — down to negative values in 2024-2025. Charges that low signal that ore is scarce relative to the capacity to process it.

Scrap is the other half of supply: about a third of the copper used each year comes from recycling. When the price rises, more scrap returns to the market and slows the rally; when trade flows are blocked, the effect is the opposite. That is another reason to read scrap indices together with the exchange price.

Demand: electrification, grids, China

On top of traditional demand — construction, machinery, appliances, vehicles — the demand of electrification has been layered in recent years: transmission and distribution grids to be expanded to connect renewables and new loads, wind and solar plants, electric vehicles containing about four times the copper of a combustion car, data centres and digital infrastructure. These uses grow for structural reasons and are little sensitive to the economic cycle.

China remains the centre of gravity: more than half of the world's refined copper is consumed there, between power grids, export manufacturing, electric vehicles and — declining — property. That is why Chinese data on imports, smelter output, Shanghai stocks and grid investment are followed as closely as mine data.

Stocks and the forward curve: the market read in the warehouses

Visible stocks in LME, COMEX and SHFE warehouses are the buffer between supply and demand: when they fall towards their lows, every production disruption weighs more and the price reacts violently; when they build up, the market absorbs news calmly. Stocks also matter for where they are: metal sitting in US warehouses waiting for tariffs is not available for Europe or Asia.

The forward curve tells the same story in another language. When the cash price exceeds the three-month price (backwardation) the market pays to have metal now: a signal of immediate scarcity. When the three-month price is higher (contango) metal is abundant and whoever stores it is rewarded. The switch from contango to backwardation often precedes the fastest rallies.

Dollar, rates and finance

Copper is quoted in dollars: a weaker dollar makes the metal cheaper for buyers in euro, yuan or rupees and tends to support the price; a strong dollar does the opposite. High interest rates raise the cost of financing stocks and cool the investments that consume copper; expectations of cuts do the reverse.

Finally financial flows: funds, ETFs and speculative positions in futures amplify moves, in both directions. Very crowded long positioning makes the market fragile to profit-taking; a lightly positioned market can run a long way on little news. These are short-term factors, but in record phases they often explain the size of the daily swings.

Tariffs and geopolitics: when markets separate

The year 2025 showed how much trade policy weighs. The expectation of US tariffs on copper pushed metal into American warehouses for months and opened an unprecedented COMEX premium over the LME; the measure that arrived in the summer — a 50% tariff on semi-finished and copper products, with cathodes, ores and scrap excluded — collapsed that premium in a day. Anyone with contracts indexed to one market and supplies tied to the other felt the difference between the two prices first-hand.

Export restrictions on ore or scrap decided by individual countries, Chinese policies on smelter capacity and logistics tensions belong to the same family. None of them changes the amount of copper in the world, but all of them change where it is and at what price it is available.

The history of the highs: how the factors combined

Copper records never come from a single cause. The sequence of the last fifteen years shows it well:

The five indicators to watch

To understand whether a rally has solid foundations or is a short-term move, five numbers are enough, all public: total stocks in LME, COMEX and SHFE warehouses and their trend; the LME cash-to-three-month spread (backwardation or contango); concentrate treatment charges; Chinese imports of refined copper and concentrates; the euro-dollar exchange rate, which for a euro buyer can be worth as much as the price.

For the Italian market the physical premium comes on top: the LME price is the starting point, but metal delivered in Italy costs the premium and, for semi-finished products, the Milan market quotation. In periods of scarcity premiums rise earlier and more than the exchange price.

The copper price on FT Mercati

FT Mercati publishes the official LME copper quotation in euro and dollars, with the exchange rate of the same session, on the dedicated page; subscribers have real-time quotations, history and premiums. Copper for semi-finished products on the Milan market has its own page among the Milan Indexes, and the daily news follows the moves of COMEX, LME and SHFE.