Experts believe the recent surge in copper prices is temporary, as it is driven more by speculation than by increased end-use demand.
By Catalina Muñoz-Kappes
So far in March, the price of copper has reached US$4.41 per pound, up from the February average of US$4.23 per pound, according to data from Cochilco based on the London Metal Exchange (LME). Prices in the United States have been higher—while the Comex average in February was US$4.56 per pound, it has climbed to US$4.90 per pound so far this month.
“From January to date, the gap between Comex and LME has widened by 15% or more, indicating a greater need for the metal in the United States. This demand is partly due to speculative or precautionary buying in anticipation of the possible implementation of specific tariffs on copper,” explains Juan Carlos Guajardo, Executive Director of Plusmining.
Yesterday, copper closed at US$4.44 per pound on the London Metal Exchange, a 0.98% drop from the previous day. In contrast, the price in the United States was US$5.10 per pound.
Higher prices suggest greater revenues for the treasury. According to Leonardo Suárez, Director of Research at LarrainVial, each additional cent in the annual average copper price translates into around US$70 million in revenue, including reinvestment in Codelco and funds going to the state.
When will this be reflected? Increased mining company revenues due to better copper prices are passed on to the treasury as taxes with “a one-quarter lag,” says Suárez.
Temporary
However, high copper prices are not expected to last. “Since this demand does not stem from end-use consumption, but rather from anticipated regulatory changes, it is considered more temporary compared to demand from manufacturers that use copper as a raw material. Therefore, the current impact on prices should also be temporary,” he adds.
For Suárez, “without a global depreciation of the dollar, the copper price increase is not sustainable.”
“It’s no surprise that the highest copper prices have occurred when the dollar was weak. Why is that? First, copper is consumed in non-dollar regions. Only 7% of global copper demand comes from the United States. Second, during global recessions or major adjustments in global demand, everyone seeks refuge in the dollar,” says the economist.
In that sense, activity in China is a more decisive factor in copper prices. “The most important factor in the supply demand balance is what happens in China, which is introducing stimulus measures, and also what’s happening in the Congo, where supply has exceeded expectations—indeed, it has become the second-largest copper producer in the world, surpassing Peru,” Suárez points out.
LarrainVial forecasts an annual average copper price of US$4.10 per pound, given that “production in the Congo exceeded expectations and the dollar may appreciate again, which is already starting to happen.”
Real value
This temporary situation is compounded by the fact that, in real terms, copper remains far from its peak. While the average value so far in March 2025 is within a historical range, “it is not a historical high, neither in nominal nor real terms,” comments Guajardo.
The current average copper price is still below the real terms peak recorded in May 2024, which was US$4.67 per poun —the highest in recent years. Extending the comparison back to 1960, copper hit peaks of around US$7.00 per pound in April 1974 (oil crisis) and April 1966 (copper market deficit), notes Guajardo.
United States and London
There are also differences between copper prices in the U.S. Comex and those on the London Metal Exchange. “While Comex trades futures contracts in a standard unit of 25,000 pounds, the LME trades in metric tons and serves as the main reference for long – and short- term contracts involving physical deliveries,” explains Felipe Cáceres, market analyst at Capitaria.
Futures are traded both in the United States and in London. Suárez explains that these are primarily relevant for investors and are treated as financial assets.
“Copper sales by companies are conducted at market prices, generally referencing the London Metal Exchange,” says Guajardo. However, he notes that futures trading is also possible. “In those cases, commercial conditions use valuation methods that consider, for example, the time of shipment or the arrival of the material, but based on the spot price at a future moment,” he comments.
Source: El Mercurio