Copper's Resurgence: A Strategic Buy Amid Supply Constraints and Dollar Weakness

The red metal is staging a comeback. Copper prices have surged to $9,896 per metric ton on the London Metal Exchange (LME) as of June 2025, driven by a perfect storm of dollar weakness, supply bottlenecks, and surging demand from the green energy transition, according to a Discovery Alert analysis. For investors, this confluence of macroeconomic and structural factors positions copper as a compelling strategic buy in a shifting global landscape.

Supply Constraints: A Perfect Storm of Disruption

Global copper production is under unprecedented strain. Operational accidents at critical mines, such as the Grasberg mine incident in Indonesia, have slashed output by 250,000–260,000 metric tonnes in 2025 alone, per OpenMarkets' outlook. Meanwhile, U.S. domestic production has lagged, with 2024 output at 1.15 million metric tonnes-far below the 1.8 million metric tonnes consumed domestically, as the Discovery Alert piece documents. This gap has been exacerbated by front-loaded imports, with U.S. refined copper imports surging 129% year-over-year in the first half of 2025, the Discovery Alert report notes.

Geopolitical tensions in key producing regions like Peru, Chile, and the Democratic Republic of Congo have further destabilized supply chains, a point the OpenMarkets outlook also highlights. Structural challenges, including raw material shortages and infrastructure bottlenecks, compound these issues. J.P. Morgan analysts note that the unwinding of front-loaded imports in the second half of 2025 could temporarily stabilize prices, but the long-term outlook remains bearish on supply, according to Discovery Alert.

Dollar Weakness: A Tailwind for Copper

The U.S. dollar's inverse relationship with copper prices has been a key driver in 2025. A weaker dollar, driven by inflationary pressures and accommodative monetary policy, has made copper-a dollar-denominated commodity-more attractive to global buyers, according to a Glasales analysis. For instance, a 0.58% drop in LME copper prices in July 2025 coincided with a rise in the dollar index following positive U.S. employment data, as reported by Discovery Alert. Historically, the dollar and copper have exhibited an 80–90% negative correlation, a relationship the Discovery Alert piece documents, and that dynamic remains intact, according to FOMC projections, which project gradual inflation declines from 3.0% in 2025 to 2.0% by 2028.

However, trade policy uncertainty looms large. The Trump administration's 50% tariff on semi-finished copper products initially spiked prices but caused a subsequent drop when refined copper was excluded from the tariff, as the Glasales analysis explains. Such volatility underscores the need for investors to hedge against geopolitical risks while capitalizing on dollar-driven demand.

Macroeconomic Drivers: Inflation, Policy, and the Green Transition

Copper's resurgence is not merely cyclical-it is structural. Central banks, including the U.S. Federal Reserve, are pivoting toward accommodative policies, with the federal funds rate projected to fall from 3.6% in 2025 to 3.0% by 2028, per the FOMC projections. This environment favors commodities as inflation hedges, particularly in a world where copper is indispensable for electrification and digitalization.

China, the world's largest copper consumer, accounts for 60% of global demand, a statistic highlighted in the OpenMarkets outlook. Its green energy push-spanning electric vehicles, solar panels, and AI data centers-is projected to drive double-digit demand growth in 2025. The OpenMarkets piece also cites estimates that AI centers alone could consume 1–2% of global copper demand by 2030. Meanwhile, aging mines and declining ore grades have stymied new discoveries, with projects typically taking 17 years to reach production, the OpenMarkets outlook adds.

Strategic Investment Case

The global copper market is projected to face a 400,000–500,000 metric tonne deficit in 2025, according to a PR Newswire release, with prices expected to trade between $9,000 and $10,500 per metric ton. For investors, this imbalance, coupled with dollar weakness and decarbonization trends, creates a compelling case for long-term positioning. J.P. Morgan forecasts LME prices to dip to $9,100 in Q3 2025 before stabilizing at $9,350 in Q4, offering a tactical entry point amid near-term volatility, as Discovery Alert reports.

Copper's role as a "new gold" in the energy transition-paired with its inverse dollar relationship-makes it a unique asset in a portfolio. As nations prioritize energy security and self-reliance, copper will remain at the nexus of geopolitical and economic forces.

Conclusion

Copper's resurgence is a macroeconomic inevitability. Supply constraints, dollar weakness, and the green transition are converging to create a rare alignment of tailwinds. For investors, the red metal offers both a hedge against inflation and a bet on the future of energy. In a world of shifting paradigms, copper is not just a commodity-it is a strategic asset.