By Ulf Bergman
Copper prices have often been seen as bellwethers for the global economy. The material’s central role in modern manufacturing drives demand and, as such, influences market pricing. Against that background, current prices suggest that the global economy is facing sunlit uplands in the near term. Still, this highlights the dangers of treating prices and other indicators as exogenous variables without accounting for underlying dynamics.
While copper’s qualities as a leading indicator are likely to remain, especially against a backdrop of the energy transition and mounting electricity needs from the infrastructure supporting artificial intelligence, the immediate outlook is likely to be driven by supply concerns rather than demand. Hence, market participants will closely monitor developments in the seaborne flows of the raw materials involved in copper production.
High but Volatile Copper Prices
The main copper futures are currently trading well above where they began the year. At the London Metal Exchange, the three-month futures are around seventeen per cent higher than at the beginning of the year, while the October High Grade Comex contracts trade around fifteen per cent above the levels seen at the end of December. After a range-bound but volatile start to the year, both sets of contracts came under pressure in March, but have been on an upward trend since.
The trading on the two exchanges broadly tells the same story. Prices surged between late March and mid-May, followed by a minor retreat and volatility. However, since the end of June, the contracts have been in recovery mode, though volatility has remained a companion. Extending the window for price analysis shows even greater appreciation, with LME prices around 45 per cent higher than a year ago and Comex up around 35 per cent.
Declining global copper inventory has supported prices. Recent reports suggest that warehouses linked to trading in London and Shanghai are running low on the red metal. However, Comex warehouses are not facing the same squeeze on physical supplies, having filled up ahead of tariffs that ultimately did not materialise. In addition to pressure on supplies, the upcoming Chinese holidays have seen buyers frontload purchases, providing additional upward pressure.
Seaborne Copper Volumes Under Pressure
During the year’s first eight months, data from Signal Ocean show that global seaborne exports of copper concentrates declined by 10.8 per cent compared with the same period in 2025. The low shipping volumes have been a theme for much of the year, with only February exceeding volumes a year earlier. In fact, the weakness began in November last year. Still, much of the year-to-date weakness was realised last month, with August’s export volumes 31.1 per cent lower than in the same month a year ago. While volumes are likely to rise around ten per cent in the current month versus August, September should still see a significant year-on-year decline.
Among the major exporters of copper concentrates, the picture is mixed. Peru, the second-largest shipper of the raw material, saw seaborne export volumes rise marginally during the year’s first eight months. Meanwhile, the largest exporter, Chile, recorded a year-on-year decline of four per cent, following double-digit growth in 2024 and 2025 during the period.
Indonesia’s near-total retreat from the seaborne copper concentrate export market accounts for a substantial part of the global decline in volumes. A combination of an expressed will to move up the value chain in the commodities space and the earlier mudslide at its Grasberg mine has driven the decline.
Like many other commodities, China is by far the largest importer of copper concentrate. According to Signal Ocean’s data, over the past four years, more than 60 per cent of the seaborne copper concentrate has been discharged in the country’s ports. Japan comes as a distant second, at around thirteen per cent. Exports bound for China faced headwinds during the year’s first eight months, with volumes shrinking more than the global decline. The weakness accelerated during August, with the monthly aggregate 39.1 per cent lower than a year ago. The headwinds appear to remain persistent, with the total for September likely to face a year-on-year decline of similar magnitude.
Given China’s dominance of the seaborne copper concentrate trade and the disappearance of Indonesian exports, voyages are generally the long trans-Pacific ones. Hence, the decline in volumes affects tonne-mile demand in the supramax and handysize vessel segments. Consequently, a pick-up in volumes amid high market prices for copper would be beneficial, but spare output capacity may be limited.
Seaborne Volumes Supportive to Prices
The soft seaborne export volumes for copper concentrates suggest copper prices will remain high in the coming months. While inventories may give smelters the opportunity to benefit from high prices, the increasingly soft numbers in recent months indicate that a drawdown may already be underway. Hence, the production upside will be limited in the short to medium term.
That said, demand will play a role in pricing over the coming months, but its impact will be a moderating factor rather than a primary driver. A more hawkish Federal Reserve following the recent interest rate hike and a stronger US dollar will weigh on prices. Additionally, the higher inflation amid elevated energy prices that prompted the Fed into action last week will maintain pressure on global economic growth, and by extension, copper demand. Nevertheless, the maritime trade data will, at this stage, not support copper’s bellwether status.
Data source: Ocean Analytics