Copper's Volatile Dance: How Geopolitics and Green Energy Keep Prices Hot

The first quarter of 2025 has been a rollercoaster for copper investors, defying initial expectations of stagnation. While fears of a U.S. recession and trade wars sent prices plummeting in April, the metal’s underlying story is far more complex. Geopolitical tensions, supply chain shocks, and the relentless march of green energy demand have kept copper in the spotlight—even as traders brace for short-term turbulence.

The Tariff Wildcard: A New Era of Volatility

The U.S. Section 232 investigation into copper imports, announced in February, upended global markets. By mid-March, the price gap between London Metal Exchange (LME) and Chicago Mercantile Exchange (CME) copper had widened to over 10%, as traders stockpiled metal in U.S. warehouses to hedge against potential tariffs. This created a surreal scenario where a single geopolitical move could add $0.50 to a pound of copper.

The investigation’s focus on China’s 50% global refined copper market share and U.S. reliance on imports (45% of consumption) underscored the fragility of supply chains. Analysts like Michael Finch of Benchmark Mineral Intelligence warned that even a 6-month tariff imposition could reshape trade flows permanently. Meanwhile, reveals how traders priced in this uncertainty, with CME premiums spiking before April’s collapse.

Supply Shocks: When Nature and Policy Collide

Geopolitics weren’t the only disruptor. In February, a power outage at Chile’s Escondida mine—courtesy of a downed transmission line—forced BHP to halt operations. The incident, though brief, sent COMEX copper futures up 0.9% in March. A far bigger blow came from Glencore’s Altonorte refinery, which declared force majeure in late February, threatening a 350,000-ton annual production shortfall.

The International Copper Study Group reported a global refined copper deficit of 19,000 tons in January, down from 24,000 tons in 2024. While Chilean output dropped 14%, Peru’s Quellaveco mine and the DRC’s Kamoa-Kakula expansion provided modest offsets. Yet, the message is clear: supply growth is slowing. reflects investor anxiety, with shares sliding 8% in March alone as operational risks mounted.

Demand: A Tale of Two Horizons

On paper, the short-term outlook is grim. CRU Group’s Erik Heimlich projects 2.9% annual copper demand growth in 2025, but April’s 20% price crash reveals fears of a U.S. recession. Housing and auto sectors—copper’s traditional pillars—are particularly vulnerable.

But long-term demand is where the real fireworks lie. The energy transition isn’t just a buzzword: EVs, solar panels, and wind farms require 4x more copper per unit than fossil fuel infrastructure. The International Energy Agency estimates this shift alone could boost copper demand by 25 million metric tons by 2040—a 40% increase from today’s levels.

highlights how investors are already pricing in this duality. Glencore’s shares surged 12% in March on green energy optimism before retreating as macro fears took hold.

Conclusion: Copper’s Bulls Still Hold the Cards

Despite April’s rout, the fundamentals remain bullish. The structural gap between supply and demand is widening: new mine discoveries are scarce, and existing projects face years of permitting delays. Meanwhile, every wind turbine and EV battery is a copper magnet.

Consider this:
- The U.S. Section 232 investigation may lead to tariffs, but they could also accelerate domestic smelting investment.
- China’s 50% global refining dominance is a vulnerability, but its green energy targets require 10 million tons of copper annually by 2030.
- The 10.7% CAGR in copper consumption through 2034 (per industry estimates) isn’t just a projection—it’s a math problem.

Traders may panic over tariffs or recessions, but copper’s long-term story is inescapable. For investors, the key is to look past the noise. Buy the dip? Absolutely—if you’ve got the stomach for volatility. The metal that built the 20th century’s infrastructure is now the bedrock of the 21st century’s energy revolution. And that’s no flash in the pan.

Data sources: International Copper Study Group, ING, Benchmark Mineral Intelligence, LME/CME price data.