After an uptrend to start the year, copper prices (as reflected in futures prices) trended in the opposite direction in the second half. Nonetheless, investment funds have remained long on copper. That confirms the faith of institutional money in the industrial metal.
Of course, where copper goes as 2024 becomes 2025 is anybody’s guess. Copper futures are up over 5% year-to-date. As long as the global electrification trend continues, this could provide the industrial metal with additional tailwinds.
As shown in a chart provided by Oil Price, faith in copper could be tested. The gap between long copper activity and short copper activity by investment funds appears to be shortening. In the middle of Q3, it almost looked like the long and short activity would converge before diverging again at the start of Q4. Heading towards the end of the year, however, it appears another possible convergence could occur. From a technical standpoint, investors could be getting mixed signals here, leading to an inflection point for copper prices.
Mixed Signals in 2025
Despite the global electrification tailwinds blowing for copper, there are also counteracting macroeconomic headwinds. ING noted that tariffs and a stronger dollar could apply downward pressure on copper prices, potentially making investment funds more hesitant to pile onto their current copper positions.
Again, China will play a crucial role in whether copper can best its 2024 performance. If the underwhelming stimulus can be shored up with measures that will make a tangible and measurable impact on the economy, this could bode well for copper.
“2025 will arrive alongside several mixed market signals,” Oil Price said. “China continues to tease more stimulus, but few believe China can meaningfully address structural issues like its aging population and moribund property sector, which has led to increased unrest due to the country’s economic problems.”
This makes copper an interesting play ahead of 2025. Prospective investors intrigued by the idea of adding copper to their portfolios should consider the Sprott Copper Miners ETF (COPP ). The fund tracks the Nasdaq Sprott Copper Miners Index (NSCOPP), which tracks the performance of a selection of global securities in the industry. That includes producers, developers, and explorers that support the industry. For diversification COPP provides blanket exposure to this mining industry by focusing on large-, mid-, and small-cap mining companies.
For more news, information, and analysis, visit the Gold/Silver/Critical Minerals Channel.
Past performance is no guarantee of future results. One cannot invest directly in an index. For the latest standardized performance and important risk disclosures regarding Sprott investment products, including each fund’s prospectus, which should be read carefully before investing, please review each product’s webpage by clicking on the corresponding ticker:
Exchange Traded Funds (ETFs): SETM, LITP, URNM, URNJ, COPP, COPJ, NIKL, SGDM and SGDJ
Physical Bullion: PHYS, PSLV, CEF and SPPP
