Copper prices are maintaining their position near recent highs, supported by a significant restocking wave in China that is effectively counterbalancing persistent global macroeconomic uncertainties, according to analysts at ING.
In a market update, ING commodity strategists Warren Patterson and Ewa Manthey highlighted the strength of the current restocking cycle. They noted that Chinese industrial buyers are aggressively building inventories ahead of the Labour Day holiday, a period typically associated with pre-holiday demand spikes. However, current volumes appear larger than seasonal norms, indicating a genuine industrial need rather than a mere precautionary measure.
This physical demand is providing a tangible floor for prices, even as global markets grapple with headwinds such as rising interest rates in developed economies and trade tensions. While speculative positions can reverse quickly, actual metal being moved into warehouses creates real price support. The analysts observed that Chinese copper imports have risen steadily over the past month, with key data points including: LME copper futures holding above $9,000 per ton, declining Shanghai Futures Exchange inventories as restocking accelerates, and rising premiums for physical delivery in Chinese ports.
Supply-side factors also contribute to price stability. Major copper mines in Chile and Peru face operational challenges like water shortages and labor disputes, constraining output. This limited ability to quickly respond to demand surges means even temporary restocking can have an outsized price impact.
Earlier this week, ING cautioned that macro risks were capping copper's upside, forecasting an average price of $8,500 per tonne for 2025 with limited upside to $9,000. The bank identified persistent inflation, elevated interest rates, and a slowdown in Chinese industrial activity as key headwinds. However, the latest data suggests that the Chinese restocking is strong enough to temporarily overshadow these concerns.
Looking ahead, ING suggests the restocking can sustain prices in the short term, with the Labour Day holiday acting as a clear catalyst. Beyond the holiday, the outlook will depend on China's economic stimulus measures, global interest rate decisions, and timelines for mine supply recovery. If China continues its industrial expansion, copper demand will remain strong; if global recession fears deepen, prices may face renewed pressure.
