
Copper navigates energy transition, supply shocks, and market turmoil – Saxo Bank MENA - Middle East Business News and Information
The combination of increased power demand for cooling and data centres, as well as the transition to cleaner energy sources and the push to mitigate climate change, will reshape commodity markets in the coming years. Governments and corporations around the world are currently investing heavily in renewable energy infrastructure, electric vehicles, and energy-efficient technologies—driving demand for key transition metals such as: Copper, essential for electrical grids, EVs, and battery storage
Aluminium, widely used in lightweight transportation and solar panel frames
Lithium, cobalt, and nickel, crucial for battery technologies
Silver and rare earth elements, vital for solar panels, wind turbines, and advanced electronics
Platinum, used in hydrogen fuel cells, electrolysers for hydrogen production, catalytic converters, and advanced battery technologies
Rising global temperatures are increasing the demand for cooling technologies, such as air conditioning—with the recent heatwave across the Southern Hemisphere a stark reminder. Together with growing power demand from data centres handling AI and cloud computing, and industrial electrification, these developments will further boost power consumption. This will increase demand for copper due to its excellent electrical conductivity, making it ideal for wiring and components crucial to efficient power transmission and distribution—an increasingly important factor as renewable energy sources are integrated into the grid.
However, for now, global financial markets have been unsettled by Trump's aggressive trade policies, sparking threats of retaliation and a broad selloff on concerns that a global trade war at the current scale and magnitude will drive an economic slowdown—not least in the US, where inflation forecasts have spiked, and consumer and business sentiment has fallen sharply in recent months.
These concerns are reflected in the copper–gold ratio, which has slumped to a multi-year low. Investors have rushed into gold amid concerns over economic growth, inflation, and financial stability—driving up its price. Meanwhile, copper, despite its long-term bullish potential, has struggled in the face of stagflation risks in some regions. These are only partly offset by continued strong demand from the energy transition. The ratio is likely to bounce eventually, but not until solutions are found to the many major challenges the world currently faces, both from a geopolical and economical perspective.
Returning to the present situation in the copper market, fears of US tariffs on copper imports remain a key factor setting the agenda in recent months. Since January, the New York-traded High Grade copper future has risen strongly relative to the global benchmark price set in London, as traders attempt to anticipate the eventual level of tariffs, with the premium currently trading around 13–15%.
Put simply, the current premium in New York is not due to strong end-user demand, but rather major stockpile shifts to the US. While this creates a windfall for traders able to source and ship copper to the US, these flows—most of which will remain in the US until consumed—will exacerbate an already tight global market in the second half of 2025. Goldman Sachs in a recent report estimated that 45-60% of global reported copper inventoreis could end up in the US by Q3 2025, and with the US only accounting for 6% of global refined demand, the rest of the world could be left with very low stocks of this important transition metal.
The recent rush to ship copper to the US has triggered a sharp reduction in warehouse stocks monitored by futures exchanges in London and, notably, Shanghai. China's inventories fell by almost 55,000 tonnes last week—the biggest weekly drop on record. With the LME seeing a 10,000-tonne decline, these were only partly offset by an 8,000-tonne increase at COMEX. The reduction is only partly explained by continued flows towards the US ahead of an expected tariff announcement, with more copper currently at sea expected to reach US warehouses in the coming weeks.
In fact, Mercuria, the commodities trading house, recently told the Financial Times that China's copper stockpiles could dwindle to nothing in just a few months. The market is undergoing 'one of the greatest tightening shocks' in its history due to fears of US tariffs. At the same time, traders in China are reporting a surge in domestic demand, driving up the premium for imported copper. This suggests that, despite concerns over economic growth, price support will likely persist in the short term—and especially over the long term—as global electrification continues to drive ever-increasing copper demand.
A report from the International Energy Forum published last May stated that meeting the world's electrification goals will require 115% more copper to be mined over the next 30 years than has been mined in all of history. Exploration spending from miners reached a decade high in 2024; however, the sector faces long-term supply constraints due to a lack of new discoveries, longer development timelines, declining ore quality, and average discovery costs now four times higher than two decades ago.
While mining companies extracting precious metals—especially gold—have seen strong year-on-year gains (e.g. a 41% increase in the VanEck Gold Miners ETF, which tracks a basket of major mining companies), copper-focused miners have experienced more muted performance, given the aforementioned challenges. However, with demand and prices expected to remain robust despite current global growth worries, the sector probably deserves renewed attention—or at least a place on the radar for potential investment.

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Al-Ahram Weekly
2 days ago
- Al-Ahram Weekly
Global markets gain and deal on Trump's tariffs lifts Japan's Nikkei 3.5% - Markets & Companies
Global shares rallied on Wednesday, with Tokyo's benchmark Nikkei 225 index gaining 3.5% after Japan and the U.S. announced a deal on President Donald Trump's tariffs. France's CAC 40 added 1.4% in early trading to 7,854.75, while Germany's DAX gained 0.9% to 24,260.62. Britain's FTSE 100 rose 0.6% to 9,075.46. The future for the S&P 500 gained 0.4% while that for the Dow Jones Industrial Average was up 0.5%. The tariff agreement as announced calls for a 15% US import duty on goods from Japan, apart from certain products such as steel and aluminum that are subject to much higher tariffs. That's down from the 25% Trump had said would kick in on Aug. 1 if a deal was not reached. 'This Deal will create Hundreds of Thousands of Jobs — There has never been anything like it,' Trump posted on Truth Social, noting that Japan was also investing 'at my direction' $550 billion into the US He said Japan would 'open' its economy to American autos and rice. Japan's benchmark Nikkei 225 surged as much as 3.7%, closing at 41,171.32. Hong Kong's Hang Seng jumped 1.6% to 25,538.07, while the Shanghai Composite index was little changed, gaining less than 0.1% to 3,582.30. Australia's S&P/ASX 200 edged up 0.7% to 8,737.20 and the Kospi in South Korea edged 0.4% higher to 3,183.77. 'President Trump has signed two trade deals this week with the Philippines and Japan which is likely to keep market sentiment propped up despite deals with the likes of the EU and South Korea remaining elusive, for now at least,' Tim Waterer, chief market analyst at Kohle Capital Markets, said in a report. There was a chorus of no comments from the Japanese automakers, despite the latest announcement, including Toyota Motor Corp., Honda Motor Co and Nissan Motor Corp. Japanese companies tend to be cautious about their public reactions, and some business officials have privately remarked in off-record comments that they hesitate to say anything because Trump keeps changing his mind. The Japan Automobile Manufacturers' Association also said it had no comment, noting there was no official statement yet. Japan's Prime Minister Shigeru Ishiba welcomed the agreement as beneficial to both sides. Toyota stock jumped 14% in Tokyo trading, while Honda was up more than 11% and Nissan added 8%. In other sectors, Nippon Steel, which is acquiring US Steel, rose 2.7% while video game maker and significant exporter Nintendo Co. added 0.7%. Sony Group surged 4.3%. But Takeshi Niinami, chairman of the Japan Association of Corporate Executives, which groups about 1,600 top executives, issued a note of caution about the nation having to be resilient and pushing free trade, while welcoming the tariff deal. 'I hope this US-Japan tariff deal can work as a starting point to further strengthen US-Japan relations,' he said. He noted the US policy of putting America first was unlikely to change, and that meant Japan, too, must make policy adjustments, such as making an aggressive push in artificial intelligence. Trump has also said that he reached a trade agreement with the Philippines following a meeting Tuesday at the White House, that will see the US slightly drop its tariff rate for the Philippines without paying import taxes for what it sells there. On Tuesday, the S&P 500 added 0.1% to Monday's all-time high. The Dow Jones Industrial Average rose 0.4%, while the Nasdaq slipped 0.4%. Also early Wednesday, US benchmark crude oil lost 23 cents to $65.08 a barrel. Brent crude, the international standard fell 21 cents to $68.38 a barrel. The US dollar fell to 146.38 Japanese yen from 146.64 yen. The euro cost $1.1736, down from $1.1754. Follow us on: Facebook Instagram Whatsapp Short link:


Al-Ahram Weekly
2 days ago
- Al-Ahram Weekly
Trump announces 'massive' Japan trade deal - Economy
Donald Trump announced Tuesday a "massive" trade deal with Japan, as a deadline looms for other major US trade partners to strike agreements before the end of the month. In an attempt to slash his country's colossal trade deficit, the US president has vowed to hit dozens of countries with punitive "reciprocal" tariffs if they do not hammer out a pact with Washington by August 1. The Japan agreement, along with another pact with the Philippines also announced on Tuesday, means Trump has now secured five agreements since his administration promised in April "90 deals in 90 days." The others were with Britain, Vietnam and Indonesia, which the White House said Tuesday would ease critical mineral export restrictions. "We just completed a massive Deal with Japan, perhaps the largest Deal ever made," Trump wrote on his Truth Social platform. He said that under the deal, "Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits". Donald J. Trump Truth Social 07.22.25 07:12 PM EST We just completed a massive Deal with Japan, perhaps the largest Deal ever made. Japan will invest, at my direction, $550 Billion Dollars into the United States, which will receive 90% of the Profits. This Deal will create… — Fan Donald J. Trump Posts From Truth Social (@TrumpDailyPosts) July 22, 2025 He did not provide further details on the unusual investment plan, but said it "will create Hundreds of Thousands of Jobs". Japanese exports to the United States were already subject to a 10 percent tariff, which would have risen to 25 percent on August 1 without a deal. Duties of 25 percent on Japanese autos -- an industry accounting for eight percent of Japanese jobs, were also already in place, plus 50 percent on steel and aluminium. Japanese Prime Minister Shigeru Ishiba said that the autos levy had now been cut to 15 percent, sending Japanese car stocks soaring, with Toyota and Mitsubishi up around 14 percent each. The Nikkei rose 3.5 percent. "We are the first (country) in the world to reduce tariffs on automobiles and auto parts, with no limits on volume," he told reporters. "By protecting what needs to be protected, we continued the negotiations with an aim to reach an agreement that meets the national interest of both Japan and the United States," Ishiba added. Rice imports However, Japan's trade envoy Ryosei Akazawa, who secured the deal on his eighth visit to Washington, said the 50 percent tariffs on steel and aluminium would remain. Akazawa also said increased defense spending by Japan, something Trump has pressed for, was not part of the agreement. Trump said Tuesday Japan has also agreed to "open their Country to Trade including Cars and Trucks, Rice and certain other Agricultural Products, and other things." Rice imports are a sensitive issue in Japan, and Ishiba's government, which lost its upper house majority in elections on Sunday, had previously ruled out any concessions. Japan currently imports 770,000 tonnes of rice tariff-free under its World Trade Organization commitments, and Ishiba said it would import more US grain within this. Ishiba said Wednesday that the deal does not "sacrifice" Japan's agricultural sector. Tatsuo Yasunaga, the chair of Japan Foreign Trade Council welcomed the trade deal announcement but said the business community needed to see details to assess its impact. "I highly commend the fact that this major milestone has been achieved and dispelled the uncertainty that private companies had been concerned about," Yasunaga said. Naomi Omura, an 80-year-old voter, said it was "disappointing that Japan cannot act more strongly" towards the United States. Tetsuo Momiyama, 81, said that Ishiba "is finished... It's good timing for him to go." Reports claimed Wednesday that he aims to step down soon following the election debacle. China talks Trump has been under pressure to wrap up trade pacts after promising a flurry of deals ahead of his deadline. Trump also said levies on the Philippines, another close US ally, would be cut by one percentage point to 19 percent after hosting President Ferdinand Marcos. But negotiations are still ongoing with much larger US trading partners China, Canada, Mexico and the European Union. US Treasury Secretary Scott Bessent said Tuesday that he would meet his Chinese counterparts in Stockholm next week. Leaders of the world's two biggest economies imposed escalating, tit-for-tat levies on each other's exports earlier this year, reaching triple-digit levels. But in talks in Geneva in May they agreed to lower them temporarily until August 12. China said on Wednesday it supported "equal dialogue" following the announcement of the Japan-US deal. "China always advocates that all parties solve economic and trade issues through equal dialogue and consultations, to protect a good environment for international economic and trade cooperation," foreign ministry spokesman Guo Jiakun said at a briefing. Follow us on: Facebook Instagram Whatsapp Short link:


Al-Ahram Weekly
2 days ago
- Al-Ahram Weekly
Stocks slip as investors eye tariff impact among corporate earnings - Markets & Companies
Major stock markets slipped on Tuesday as New York backed off its record highs and European markets fretted over an August 1 deadline for the EU to avert steep tariffs from President Donald Trump. US corporate profit reports so far were painting a generally resilient picture of the American economy, but with gathering clouds in some sectors, particularly automobiles, from Trump's levies on major trading partners. New York's broad S&P 500 and tech-heavy Nasdaq indices dipped, from record finishes on Monday, while the blue-chip Dow struggled. In Europe, only London ended the trading day in the green. Paris and Germany both finished solidly in the red. "European markets have been getting increasingly jittery as the (August 1) deadline approaches," said David Morrison, senior market analyst at Trade Nation. "With little sign of progress so far, investors are preparing for possible tariff retaliation from the EU." US Treasury Secretary Scott Bessent said meanwhile he would meet his Chinese counterparts in Stockholm next week for tariff talks, as a separate mid-August deadline approaches for US levies on China to snap back to steeper levels. Big earnings reports Closely-watched earnings loomed from some of the world's biggest names, including Tesla, Google parent Alphabet, Intel and Coca-Cola. US auto giant General Motors reported a 35-percent plunge in second-quarter profits Tuesday following a $1.1-billion hit from US tariffs, but confirmed its full-year forecast. Its shares plunged seven percent. Elsewhere, "expectations for the earnings season include accelerated profit growth for major US technology companies in the second half of the year," said Jochen Stanzl, chief market analyst at CMC Markets. British pharmaceutical giant AstraZeneca said Tuesday it would invest $50 billion in the United States by 2030 amid Trump's threats to impose tariffs on the sector. The dollar continued to lose ground, which has the effect of pumping up the earnings of US multinationals earning foreign currency revenue but reporting in dollars. The greenback's slippage is proving "a turbocharger" for those companies, according to Stephen Innes, managing partner at SPI Asset Management. Investment adviser Christopher Dembik at Pictet Asset Management said European companies reporting over coming days were conversely set to be hit by the effect of a stronger euro. Oil prices also dropped amid worries about reduced global economic activity going forward. Earlier in Asia, Hong Kong hit its highest close since late 2021. Its index has gained around 25 percent this year thanks to a rally in Chinese tech firms and a fresh flow of cash from mainland investors. Tokyo dipped following an earlier rally after the ruling coalition lost its upper-house majority as observers warned the government's tenure remained fragile. Fed chief speech Traders were also looking ahead to a speech later Tuesday by US Federal Reserve Chair Jerome Powell, ahead of the Fed's monetary policy meeting on July 29 and 30. Powell has come under pressure from Trump to quit, with the president angry at the Fed for not lowering interest rates in response to recent turbulence, but the central bank is expected to keep them on hold until September. Bessent said Tuesday he did not see a reason for Powell to resign "right now". Key figures at around 1545 GMT New York - Dow: UP 0.1 percent at 44,351.64 New York - S&P 500: DOWN 0.1 percent at 6,296.95 New York - Nasdaq Composite: DOWN 0.5 percent at 20,875.05 London - FTSE 100: UP 0.1 percent at 9,019.76 points (close) Paris - CAC 40: DOWN 0.7 percent at 7,739.18 (close) Frankfurt - DAX: DOWN 1.1 percent at 24,027.17 (close) Tokyo - Nikkei 225: DOWN 0.1 percent at 39,774.92 (close) Hong Kong - Hang Seng Index: UP 0.5 percent at 25,130.03 (close) Shanghai - Composite: UP 0.6 percent at 3,581.86 (close) Euro/dollar: UP at $1.1734 from $1.1688 Pound/dollar: UP at $1.3507 from $1.3485 Dollar/yen: DOWN at 146.51 yen from 147.42 yen Euro/pound: UP at 86.89 pence from 86.68 pence Brent North Sea Crude: DOWN 1.2 percent at $68.37 per barrel West Texas Intermediate: DOWN 1.3 percent at $65.06 per barrel. Follow us on: Facebook Instagram Whatsapp Short link: