Global copper prices have surged 6% in the opening days of 2025, hitting a three-week high of $4.29 per pound, as supply shortages and increasing industrial demand collide with President-elect Trump's proposed tariff policies.
Market data shows 2024 was an exceptionally volatile year for copper. Prices climbed steadily through the first five months, peaking above $5 per pound in May, before experiencing a sharp decline through August. A September rally pushed prices back to $4.8 per pound, but the year ended with another downturn to below $4.
Two primary factors are driving the current price surge: a growing global copper shortage and increasing demand from emerging industries. An S&P Global report warns that the world faces a significant supply crisis, with mine output expected to peak in 2026 before declining at an annual rate of 2.3%.
"We're seeing persistent underinvestment in copper mining exactly when global demand is soaring," explains Kyle Rhoda, senior analyst at Capital.com. "The transition to electric vehicles, renewable energy, and the AI industry is intensifying the need for copper."
China, as both the world's largest copper consumer and producer, is taking steps to stabilize the market. Recent measures include expanding a consumer trade-in program to cover electrical appliances. Analysts expect Beijing to implement additional interest rate cuts and lower bank reserve requirements to support economic growth.
However, Trump's announcement of new tariffs threatens to disrupt the market further. The President-elect plans to impose 60% tariffs on Chinese exports and 25% on goods from Mexico and Canada. These measures could trigger inflation in the U.S., potentially forcing the Federal Reserve to slow its easing cycle or even raise interest rates.
For Israel, which relies heavily on copper imports for its hi-tech and electronics industries, the impact could be significant. The combination of higher prices and trade barriers poses challenges for Israeli companies operating in both U.S. and Chinese markets.
ING's market analysis suggests copper prices will remain elevated through the first quarter of 2025, primarily due to China's excess refining capacity. However, the implementation of Trump's tariffs could halt this upward trend in the second and third quarters, despite additional stimulus measures expected from China.
As copper prices spiral and Trump's tariff deadline looms, Israeli industry faces a stark choice: absorb the rising costs of this essential metal or pass them on to consumers - all while navigating what could become the biggest trade war since 2020.
For a nation that built its economic miracle on tech manufacturing, Trump's new copper policy is extremely concerning.
Maariv contributed to this article.
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