Copper nears record as US-China optimism adds to supply woes

Core Insights - Copper prices are nearing record highs due to optimism surrounding a potential US-China trade deal and disruptions in major mining operations [1][2] - The demand for copper is projected to increase significantly, with BHP Group estimating a 70% rise by 2050 [2] Group 1: Market Dynamics - Copper prices on the London Metal Exchange increased by 1.2% to $11,094 per ton, approaching the record set in May 2024 [2] - The price of copper has surged by 25% this year, recovering from a previous decline linked to trade tensions initiated by former President Trump's policies [2] Group 2: Supply Constraints - Recent disruptions, including flooding at Ivanhoe Mines' Kamoa-Kakula complex, a rock blast at Codelco's mine in Chile, and a mudslide at Freeport McMoRan's Grasberg mine, have contributed to rising copper prices [3] - These supply issues raise concerns about the ability of producers to meet the increasing demand for copper in electric vehicles and data centers [3] Group 3: Trade Relations Impact - Easing tensions between the US and China are expected to positively influence copper demand, as the US has retracted threats of high tariffs and China has paused plans to expand rare earth export controls [4] - The recent trade negotiations have led to fluctuations in copper prices, with a rally resuming as tensions eased [5] Group 4: Currency Influence - The decline of the US dollar, which has fallen approximately 8% since mid-January, has made commodities like copper more attractive to investors [6] - Expectations of further interest rate cuts by the Federal Reserve are anticipated to stimulate economic growth, benefiting raw material prices [6]