On June 9, 2025, copper prices on the London Metal Exchange (LME) saw a dramatic rally, with the three-month copper spot settlement price surging to $9,867 per tonne. The daily increase of 4.2% marked the largest single-day gain since March 2022, driven by a confluence of shifting macroeconomic expectations, supply chain tensions, and geopolitical risks.
Macro policy shift ignites market sentimentThe latest minutes of the Federal Reserve meeting released on June 8 suggested that the Fed's stance has turned dovish, suggesting that the pace of interest rate hikes will be slowed to cope with potential economic headwinds. CME interest rate futures data showed that market expectations for the Fed's interest rate cut in the second half of 2025 have risen to 72%. The US dollar index fell to 100.23, a three-month low. As a typical dollar-denominated commodity, copper prices have a strong negative correlation with the US dollar-historical data show that for every 1% drop in the US dollar index, the London Metal Exchange (LME) copper price has risen by an average of 1.8%.
At the same time, the People's Bank of China announced a 15 basis point cut in the medium-term lending facility (MLF) interest rate, injecting about 300 billion yuan of long-term liquidity. As the world's largest copper consumer, China's infrastructure investment and manufacturing recovery expectations have directly boosted demand prospects. Shanghai Futures Exchange copper inventories have fallen for six consecutive weeks, down 42% from the beginning of the year to a low of 158,000 tons.
Chilean copper miners launched a nationwide strike on June 7 to protest against salary and benefit cuts by mining companies. As the world's largest copper producer (accounting for 28% of global annual output), the strike involves seven major mines including Escondida and Collahuasi, potentially affecting approximately 500,000 tonnes of monthly production. Barclays analysts note that if the strike lasts more than two weeks, the global copper market could face a 120,000-tonne supply gap.
Transport routes for copper-cobalt mines in the Democratic Republic of Congo (DRC) were also disrupted by heavy rainfall-triggered mudslides, halting supplies from a region that annually exports about 1.8 million tonnes of copper. Meanwhile, the Indonesian government further delayed the lifting of its raw ore export ban, reducing copper concentrate export quotas by 35% compared to last year, further straining raw material supplies for refined copper. LME copper spot premiums have surged from $25 per tonne at the start of the month to $112 per tonne, the highest since 2016.
Escalating tensions in the Middle East, with the Houthi rebels in Yemen claiming attacks on Red Sea merchant vessels, have sharply increased shipping risks in the Suez Canal. As one of the most transport-dependent industrial raw materials, approximately 19% of global copper trade passes through the Suez Canal. Merchant ship insurance rates have surged 270% from the previous week, and some shipping companies have suspended cargo bookings on the route, causing cross-regional arbitrage costs for LME copper to skyrocket by 40%.
Spillover effects from the Russia-Ukraine conflict are also evident—the largest copper smelter in Ukraine halted production due to attacks on power facilities, while Russian copper exports face the EU's sixth round of sanctions, with exports to Europe falling 63% year-on-year from January to May 2025. The latest report from the International Copper Study Group (ICSG) forecasts a 450,000-tonne supply-demand gap in the global copper market in 2025, the largest deficit since 2011.
The surge in copper prices quickly spread to downstream industries: Gree Electric Appliances, a Chinese air-conditioning compressor company, announced that it would raise product prices by 5-8% from June 15, while data from the U.S. Association of Builders showed that the cost of residential copper pipes has risen by 32% from the beginning of the year, resulting in a 2.7% month-on-month decline in the start of new housing. The automotive industry was more significantly affected. Tesla's Berlin factory planned to reduce the production of Model Y by 15% in the third week of June due to an emergency inventory of copper cables.
Institutions have obvious differences in their outlook: Goldman Sachs raised its three-month copper price forecast from $9,200/ton to $10,500/ton, believing that supply chain bottlenecks will be difficult to ease in the short term; while Morgan Stanley warned that if the global manufacturing PMI falls below the boom-bust line of 48, copper prices may fall back to $8,500/ton in the third quarter. LME's non-commercial net long position has reached 78,654 lots, the highest since May 2021. The influx of speculative funds may amplify the risk of price fluctuations.
This violent shock in the copper market is not only a direct reflection of the supply and demand fundamentals, but also the result of the interweaving of global macroeconomic policies, geopolitical games and financial speculation. Its subsequent evolution will continue to affect the nerves of the entire industrial chain.
