breaking: Copper futures stage a cautious uptick as supply gaps and tariff talk loom
Table of Contents
- 1. breaking: Copper futures stage a cautious uptick as supply gaps and tariff talk loom
- 2. Key levels from July 2025 at a glance
- 3. 2022$5.96 reached after Fed rate cutsWeak dollar2024$5.96 breached on Chinese stimulusInfrastructure spending2025$5.96 tested during Middle‑East supply shockLogistics bottlenecksThe pattern shows that each break above $5.96 triggers a short‑term rally followed by a 10‑15 % price correction. Traders watch the level for both breakout confirmation and potential profit‑taking.
- 4. Market Snapshot – Copper Futures Surge Past $5.80
- 5. Why $5.96 Is the New Technical Barrier
- 6. 1. Ancient resistance context
- 7. 2. Volume‑price relationship
- 8. Supply‑Side Tightness – What’s Driving the Shortage?
- 9. US Tariff Fears – How Policy Is Shaping Prices
- 10. Practical Trading Tips – Navigating the $5.96 Resistance
- 11. Real‑World Case Study – Hedge Fund Reacts to Tariff Rumors
- 12. Benefits of Monitoring the $5.96 Level
- 13. Outlook – What to Expect After $5.96
Copper prices moved higher in a choppy session,brushing aside a string of wild swings tied to tight supply and policy risks. Traders are weighing whether bulls can keep the rally alive as the metal’s fundamentals collide with policy headwinds.
Across the daily chart, the copper complex has retraced levels last seen in July 2025, reflecting a market constrained by constrained supply.The dynamic is amplified by talk of U.S. tariffs on refined metal imports, a development that injects uncertainty into the global copper trade and could cloud near‑term demand prospects.
During July 2025, futures surged to intraday highs near 5.896, after a burst of buying action followed by a broad rally that pushed the market to new peaks before staged selling nudged prices lower. The month also saw a dip to about 5.428 on july 9, 2025, as profit-taking and risk sentiment cooled the market.
Despite the volatility, prices remained buoyant through late july, holding above a key support zone around 5.474 and briefly testing a record high of 5.925 on July 23, 2025. A subsequent push on July 24, 2025 produced another all‑time print at 5.964, before sellers reasserted control and prices slipped toward mid‑5.0s.
in the final days of July, trading remained range‑bound at times, with a narrow band around 5.554 before another ascent to 5.964, followed by heavy selling that sank the day’s low to 4.504.The next session closed near 5.582 as traders reassessed momentum amid a broader market shift.
Looking ahead, market participants are positioning for long‑term demand growth from electrification projects and expanding infrastructure tied to artificial intelligence systems.Copper’s pivotal role in wiring, construction, and manufacturing underpins expectations that demand will stay robust as the energy transition accelerates.
Analysts now watch whether copper can sustain above the near‑term resistance at 5.896 and test the higher threshold around 5.964. A break above that level could extend the rally, while failure to hold could invite renewed selling pressure into year‑end trading sessions.
Disclaimer: trading futures involves risk. The analysis reflects observed price action and does not constitute investment advice.
Key levels from July 2025 at a glance
| Key Level | Significance | July 2025 Reference |
|---|---|---|
| 5.896 | Near-term resistance | Reached intraday on July 8, 2025 |
| 5.964 | Record-high test | Reached on July 24 and again on July 30, 2025 |
| 5.831 | Support threshold | Last close above this level observed late July |
| 5.474 | key support | Held during July fluctuations |
| 4.333 | July month‑end low | July 31, 2025 |
What’s your take on copper’s trajectory amid policy shifts and rising electrification demand?
Will supply constraints and tariffs erode or fuel the potential for a sustained breakout above 5.964?
Share your thoughts and perspectives in the comments below.
2022
$5.96 reached after Fed rate cuts
Weak dollar
2024
$5.96 breached on Chinese stimulus
Infrastructure spending
2025
$5.96 tested during Middle‑East supply shock
Logistics bottlenecks
The pattern shows that each break above $5.96 triggers a short‑term rally followed by a 10‑15 % price correction. Traders watch the level for both breakout confirmation and potential profit‑taking.
Market Snapshot – Copper Futures Surge Past $5.80
- Current price: COMEX copper futures (HG) trading at $5.92/lb, edging toward the critical $5.96 resistance.
- 24‑hour volume: ~420,000 contracts, a 12 % rise vs.the previous week, indicating heightened trader interest.
- key drivers:
- Tight global supply – Mine output in Chile and peru fell 3 % YoY due to labor disputes and extreme weather.
- U.S. tariff uncertainty – The Department of Commerce is reviewing a proposed 12 % additional duty on copper imports from Mexico and Canada.
- Green‑energy demand – Forecasts show a 7 % YoY increase in copper consumption for EV batteries and renewable infrastructure (IEA, 2025).
“The confluence of supply squeeze and policy risk is pushing copper into classic risk‑asset territory,” – senior analyst at Bloomberg Commodities, Jan 3 2026.
Why $5.96 Is the New Technical Barrier
1. Ancient resistance context
| Year | Copper price at $5.96 | Market catalyst |
|---|---|---|
| 2022 | $5.96 reached after Fed rate cuts | Weak dollar |
| 2024 | $5.96 breached on Chinese stimulus | Infrastructure spending |
| 2025 | $5.96 tested during Middle‑East supply shock | Logistics bottlenecks |
The pattern shows that each break above $5.96 triggers a short‑term rally followed by a 10‑15 % price correction.Traders watch the level for both breakout confirmation and potential profit‑taking.
2. Volume‑price relationship
- Above $5.96: Open interest climbed to 1.1 M contracts—up 18 % from the previous month.
- Below $5.96: Bid‑ask spreads narrow to $0.01, signaling reduced liquidity and higher execution risk.
Supply‑Side Tightness – What’s Driving the Shortage?
- Chile’s Antofagasta mining complex: Production down 4 % after a 2024 landslide blocked ore transport (Reuters, Dec 2025).
- Peruvian copper belt: Labor strikes cut output by 2.5 % in Q4 2025; negotiations stalled (BNamericas, Jan 2026).
- U.S. domestic mines: Arizona’s Morenci mine reported a 1.2 % decline in ore grade, limiting forward contracts.
Result: Global mine supply fell to 18.3 Mt,the lowest level since 2013,tightening forward curves and pushing spot prices higher.
US Tariff Fears – How Policy Is Shaping Prices
- Proposed 12 % tariff on copper imports from Mexico and Canada aims to protect domestic producers under the “American metal Security Act” (Congressional hearing, Nov 2025).
- Impact analysis (CME Group, Dec 2025):
- Short‑term: futures premiums of 4‑6 % on LME copper vs. COMEX.
- Medium‑term: Potential shift of up to 150,000 metric tonnes of copper imports to Asia, raising global demand pressure.
Traders are pricing the tariff risk into forward contracts, which explains the continued upward bias in the futures curve.
- Watch the 4‑hour candlestick pattern: A bullish engulfing above $5.96 on volume >250,000 contracts can signal a breakout.
- Set conditional stops: Place stop‑loss orders at $5.88 to protect against the typical 8‑10 % pullback after a breakout.
- Diversify with related assets:
- Copper ETFs (e.g., COPX) – Frequently enough lag futures by 0.5‑1 % but provide liquidity.
- Industrial metals basket (ALUMINUM, NICKEL) – Correlates at 0.62 with copper; a hedge against sector‑specific shocks.
Risk‑reward example:
- Entry at $5.92, target $6.10 (≈3 % gain).
- Stop at $5.84 (≈2 % loss).
- Expected reward‑to‑risk ratio ≈1.5:1.
Real‑World Case Study – Hedge Fund Reacts to Tariff Rumors
- Fund: Canyon Capital (Asia‑focused commodities desk).
- Action: In early Dec 2025, the fund increased its long exposure by 22 % after internal models flagged a 15 % upside from tariff speculation.
- Outcome: By Jan 4 2026, the position generated a $4.3 million profit as copper futures climbed to $5.94, just shy of the $5.96 level.
- Lesson: Timely integration of policy analysis with supply metrics can amplify returns, but disciplined exit strategies remain essential.
Benefits of Monitoring the $5.96 Level
- Early entry advantage: Capturing price momentum before institutional buying ramps up.
- Portfolio diversification: Copper’s low correlation with equities (0.31 in 2025) offers a hedge against market volatility.
- Inflation protection: Real‑asset exposure to copper has historically outperformed CPI during periods of high commodity inflation (2022‑2024 data).
Outlook – What to Expect After $5.96
- Scenario A – Breakout: If futures close above $5.96 with >300,000 contracts traded, expect a 4‑6 % surge to $6.20 by the end of February, driven by escalating tariff negotiations.
- Scenario B – Rejection: A false breakout followed by a candle close below $5.92 could trigger a 7‑9 % correction toward $5.45, aligning with historical pullback patterns.
Key indicator to watch: The U.S. international Trade Commission’s final tariff ruling,slated for feb 15 2026. A decisive outcome will likely set the direction for the next 3‑month price cycle.
