The Copper Monthly Metals Index (MMI) ended 2024 on a bearish note, declining 4.65% from November to December, despite a year marked by volatility and fluctuating demand conditions.
Copper prices, often viewed as a barometer for global economic health, experienced a turbulent 2024, driven by market sentiment rather than robust demand. While the metal showed an overall increase through the year, the outlook for 2025 remains uncertain.
Q1: Modest Gains Amid Mixed Signals
The year began with optimism, as many expected the Federal Reserve’s first rate cut since March 2020 and hoped for a surge in U.S. infrastructure and renewable energy projects. These factors were expected to support copper prices amidst concerns about a potential supply deficit. However, persistent inflation and strong economic data held back those expectations, leaving copper prices to trend sideways throughout the first quarter. Despite this, a rise in treatment and refining charges at the end of March sparked a temporary spike in prices, driven by increased long positions from investment funds. By the close of Q1, copper prices had increased by 2.37% from the end of 2023.
Q2: Price Surge Followed by Volatility
In the second quarter, copper prices maintained upward momentum, fueled by rising investor interest across base metals, including nickel, which had been struggling since the 2022 squeeze. Many investors believed that copper would benefit from growing electrification demand and constrained mine supply. Despite this optimism, metal markets appeared well-stocked, and spot demand did not match future expectations.
By late May, a short squeeze triggered by low Comex copper stocks caused prices to skyrocket, with Comex copper reaching a new all-time high of $11,257 per metric ton on May 22. This marked a significant peak, over 30% higher than the start of the year. However, the price quickly retraced, and the quarter closed with an 8.24% rise from Q1, making it the strongest performing quarter of 2024 for copper.
Q3: Stimulus Boost and a Short-Lived Rally
The third quarter began with copper prices still recovering from the Q2 retreat. After a brief jump in early July, prices found a bottom near Q1 levels before rallying again in August ahead of the Fed’s first rate cut. This rally was supported by China’s new stimulus measures and concerns over a potential port strike in October. Prices closed Q3 with a 5.77% increase, driven by these mixed signals of government intervention and supply concerns.
Q4: A Disappointing End to the Year
In the fourth quarter, the copper rally stalled as prices hit a ceiling in early October, signaling the end of the Q2 uptrend. Markets were disappointed by the modest results of China’s stimulus efforts, while fears of supply disruptions eased following the conclusion of the brief port strike. A strong U.S. dollar, supported by the outcome of the November U.S. presidential election, further weighed on copper prices. By December 13, copper had fallen 8.14% since the end of Q3, marking Q4 as the worst-performing quarter of 2024, absent any significant year-end spike. Nevertheless, copper prices remained 7.66% higher than at the close of 2023.
A Mixed Outlook for 2025
As 2025 approaches, market signals remain mixed. While China has hinted at more stimulus, few believe it can resolve long-term structural issues like its aging population and struggling property sector, which continue to pose significant challenges to its economy. On the U.S. side, the new administration’s focus on infrastructure and renewable energy projects may provide some support, but potential policy shifts, including a reduction in subsidies for electric vehicles and wind towers, could dampen copper demand.
With these factors in mind, the copper market is expected to enter 2025 with a cautious outlook, as investors recalibrate expectations based on evolving global economic conditions.
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