Copper's Crucible: Technical Support and Tariffs Test Market Resolve

The price of copper has been caught in a tug-of-war between technical dynamics and geopolitical risk, with traders now eyeing the $9,760-per-metric-ton 21-day moving average as a critical test of resolve. As the U.S. tariff deadline on imported copper looms—set for July 9—the interplay between chart patterns and macro risks could determine whether this key support holds or triggers a deeper sell-off.

The Technical Crossroads at $9,760

Copper futures have retreated to the 21-day moving average ($9,760/mt), a level that has acted as a psychological and technical anchor for traders. This support level, highlighted in recent analyst briefs, is now under scrutiny as prices hover near it. A sustained breach below this threshold would likely trigger a technical sell-off, with the next support zone seen at the $9,500–$9,600 range. Conversely, a rebound above $10,000/mt could signal renewed momentum toward the $10,300 all-time high set in February 2025.

Geopolitical Risk Premiums in Play

The U.S. tariff deadline on July 9 adds a layer of uncertainty. Analysts at PandorraResearch note that tariffs on Chinese copper imports could disrupt global supply chains, particularly given China's role as a major consumer and exporter. A failure to resolve the dispute risks widening risk premiums, pushing copper prices lower as investors rotate into safer assets. Conversely, a negotiated agreement could spark a relief rally, with prices surging toward $10,500/mt.

The Fed's rate outlook further complicates the picture. If the U.S. central bank signals a pause in hikes, it could ease financial conditions, boosting demand for industrial metals. However, persistent inflation pressures might keep rates elevated, damping investment in infrastructure projects that rely on copper.

Aluminum Supply Constraints Add Fuel to the Fire

Meanwhile, aluminum markets face their own supply bottlenecks, with LME inventories near decade lows. This scarcity has pushed aluminum prices to 18-month highs, raising the possibility of substitution demand for copper in certain applications. However, analysts at the International Copper Study Group caution that aluminum's premium over copper may limit its appeal in critical sectors like EV batteries and renewable energy systems.

A Tactical Trading Strategy

The current technical and geopolitical landscape suggests a dual-pronged approach:

1. Short Position Below $9,760: If copper closes below the 21-day moving average, traders should consider shorting futures contracts, targeting the $9,500–$9,600 support zone. Stop-loss orders above $10,000 can protect against a false breakout.

2. Long Hedge on Tariff Resolution: If the July 9 deadline passes without escalation—or if a compromise is reached—investors could buy call options on copper ETFs (e.g., JJC) to capitalize on a potential rebound.

3. Monitor Aluminum Correlations: Use to gauge substitution dynamics. A widening gap between the two metals may signal structural demand shifts.

Conclusion: Navigating Volatility with Precision

Copper's price action in June 2025 is a microcosm of the broader commodities market's struggle to balance technical signals with macro risks. While the 21-day moving average offers a clear technical anchor, traders must remain vigilant to geopolitical developments and Fed policy shifts. For investors, a disciplined approach—combining technical watchpoints with geopolitical risk management—could turn this volatility into opportunity. As the July 9 deadline approaches, copper's journey will test both its fundamentals and the market's nerve.

Final Note: Always consult your financial advisor before making investment decisions.