Copper Price Outlook: Traders Target All-Time Highs Amid Global Trade War

China's 5% growth target and potential U.S. tariffs support the metal's third monthly gain

• Copper prices are continuing to move higher as the metal looks to make the highest close since May.
• Stimulus efforts from China and Germany may provide a tailwind for the metal.
• The technical structure copper prices remain bullish as longs wait for the next buying opportunity.

Traders continued to bid on U.S. copper futures (/HGK5) during today’s trading session, adding to gains from the previous session when the metal rose more than 3.5% on the day as concern over tariffs and growing expectations for stimulus from China supported base metals.

Wednesday's move of about 1.7% saw prices briefly trade as high as 4.9035, the highest level since May. The fresh multi-month high may be a harbinger of things to come. Copper is moving into the U.S., as expected tariffs push suppliers to front-run any trade measures.

The arbitrage is evident in the spread between U.S. prices and prices on the London Metal Exchange, which exceeded 10% as of March 12. This has put pressure on stocks in Europe, as buyers divert inventory to the U.S. for the higher prices.

Two weeks ago, the Trump administration directed the Commerce Department to investigate tariffs on copper as part of the broader strategy on trade restrictions. President Trump is framing the metal as a vital component to national security, arguing that an oversupply in other parts of the market (outside of the U.S.) can cause a dependency on exports for the defense industry.

The investigation of copper tariffs derives authority from the Trade Expansion Act’s Section 232, which empowers the president to impose tariffs to meet domestic security concerns. President Trump and Commerce Secretary Howard Lutnick want to revamp the U.S. copper industry.

China adds a tailwind to copper prices

Beijing recently announced China remains committed to growing its economy by 5% in 2025, matching targets from the last two years. Besides the growth target, China aims for a larger budget deficit, which means more spending and support for the economy.

Meanwhile, copper production in China is expected to increase again this year to another record high. Beijing is taking steps to limit the output of copper in the country, but those efforts likely won’t show an impact until 2026 at the earliest. Many smelters in China are losing money amid low smelting fees, but competition for concentrate supply has kept them running at or near capacity. Most of that production is going toward domestic renewable energy efforts.

Besides Chinese-related tailwinds, Germany is also focusing on boosting fiscal spending on defense and infrastructure. Those projects could boost Europe’s demand for copper in the coming years as capital is expensed to bolster the country’s defense industry.

Trading copper

Copper is tracking for its third monthly gain as prices approach all-time highs from May. Currently, prices have retraced nearly 78.6% of the May to August move from 2024, with some resistance and support evident at the 61.8% and pseudo 50% Fibonacci retracement levels. A close above the 78.6% Fibonacci retracement may open some more upside for the metal.

The upward sloping 9- and 21-day exponential moving averages (EMAs) have supported prices on downswings. If we hold that tempo, a pullback to the 21-day EMA (blue moving average) may offer an optimal long entry. However, given the recent momentum, buyers may step in before prices drop that much.

Currently, copper trades with an implied volatility rank (IVR) of 14.1, meaning volatility is subdued compared to the past 12 months of trading. That said, those looking to get long could consider buying a call spread. That is likely a better strategy than selling a put spread. Ultimately, waiting for a pullback to the aforementioned EMAs may be the most prudent strategy, but you risk missing the next leg higher if copper receives another bullish catalyst over the short term.

Thomas Westwater, a tastylive financial writer and analyst, has eight years of markets and trading experience. #@fxwestwater
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