Why Copper is Poised for a Deficit-Driven Rally in 2025: Act Now Before the Bull Run Accelerates

Julian WestWednesday, May 28, 2025 3:38 pm ET
32min read

The copper market stands at a critical crossroads in 2025, with a perfect storm of supply shortages, geopolitical tension relief, and surging demand from the global energy transition. Investors who act swiftly to capitalize on this confluence of factors could reap significant rewards as prices surge toward $5.00/lb and beyond. Here's why copper is a must-buy now—and how to position for maximum gains.

The Supply Crunch: Chile's Downgrade Signals Tightening Markets

Chile, the world's top copper producer, recently revised its 2025 production growth forecast to just 3%, down from an earlier 4.6%, citing declining ore grades, environmental regulations, and labor disruptions. The state-run Cochilco now projects a global copper deficit of 109,000 tons in 2025, a stark reversal from earlier surplus expectations. Even as Chile's Codelco reported a 5.2% production rise in April, global supply growth has collapsed to 1.3%, the lowest in a decade. This scarcity is compounded by:- Geopolitical Risks: U.S. Section 232 tariffs on copper imports loom, threatening to disrupt global flows.- Environmental Pushback: Peru's anti-mining protests and Indonesia's export bans on raw minerals are tightening supply further.

Demand Surge: The Energy Transition is Copper's Lifeline

The global shift to renewables and electric vehicles (EVs) is driving 60% of copper demand growth through 2026. A single EV requires 80 pounds of copper—four times the amount in a traditional car. Add solar panels, wind turbines, and grid upgrades, and the math is clear: annual demand growth of 3.5% (per ANZ Bank) will outstrip constrained supply. Key drivers include:- China's EV Boom: Beijing's $100 billion EV subsidy plan could boost domestic copper demand by 1.2 million tons by 2030.- U.S. Infrastructure Investment: The Inflation Reduction Act's $369 billion for clean energy will fuel copper demand for solar farms and transmission lines.

Technical Picture: $4.60 is the New Floor—$5.00 is the Prize

Copper's recent dip to $4.55/lb on May 19 has created a golden buying opportunity. Technical analysis confirms:- Key Support: The $4.60/lb level is critical. A breach below risks a drop to $4.45, but sustained trading above $4.60 signals a resumption of the bull trend.- Resistance Breakouts: Overcoming the $4.69 50-day moving average opens the door to $5.00/lb. Goldman Sachs sees prices hitting $5.50/lb by end-2026, while Mercuria's traders whisper of a $12,000/tonne ($5.44/lb) price if China's stimulus accelerates.- Momentum Signals: The RSI and MACD indicators show oversold conditions at $4.55, suggesting a rebound toward the $4.81 61.8% Fibonacci retracement level (see chart below).

Risks to Consider—but Don't Let Them Deter You

  • U.S. Tariffs: A potential 25% tariff on imports could disrupt flows, but a 90-day U.S.-China truce has eased immediate fears. Buyers are already stockpiling, creating a $200/tonne premium in U.S. markets.
  • Economic Slowdown: A U.S. GDP contraction in Q1 and China's deflationary pressures pose short-term risks. Yet, structural deficits by 2026 mean long-term fundamentals remain bullish.
  • Volatility: Copper's recent $0.30/lb swings demand caution. Set stop-losses below $4.60 and target $5.00/lb for a 9% upside.

Action Plan: Buy Now, Hold for the Rally

  • Entry Point: Accumulate positions at $4.60/lb, with a stop-loss below $4.55.
  • Target: Aim for $5.00/lb in the next 6–12 months, then reevaluate toward Goldman's $5.50/lb 2026 forecast.
  • Hedging: Use futures contracts or ETFs like COPX (Copper Miners ETF) to mitigate short-term swings.

Conclusion: The Copper Bull Market is Just Heating Up

With supply constrained by geology and geopolitics, and demand roaring from EVs and renewables, copper is primed for a multi-year rally. The $4.60/lb price is a buying floor, not a ceiling. Investors who act now can secure a piece of the next great commodities boom—before the world's insatiable thirst for copper drives prices to new stratospheres.

COPX, SPY Closing Price
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Data shows COPX outperforming equities by 15% in 2024 amid rising copper prices.

The window to buy copper at these levels won't stay open long. Act now—before the deficit-driven rally leaves you in the dust.