Copper recorded its largest annual gain since 2009, driven by supply constraints and anticipation that demand, particularly related to electrification, will outstrip production. The red metal's price on the London Metal Exchange (LME) rallied 42% this year, making it the top performer among the exchange's six industrial metals.

However, on Wednesday, the last trading day of 2025, copper prices dipped 1.1%. The year-end surge was fueled by traders accelerating shipments to the U.S. in anticipation of potential tariffs, creating supply tightness in other regions. According to Natalie Scott-Gray, senior metals analyst at StoneX Financial Ltd., the expectation of future U.S. import tariffs on refined copper led to over 650,000 tons of metal entering the country, tightening availability outside the U.S.

Former President Trump's plan to revisit tariffs on primary copper in 2026 revived arbitrage trading, which had previously impacted the market, further limiting availability even as demand in China, a key buyer, softened. This price spread recently narrowed amid a strong December rally on the LME.

The rise in copper prices reflects a broader trend of increasing demand for metals essential to the global transition toward electric vehicles, renewable energy infrastructure, and other technologies aimed at reducing carbon emissions. Copper is a crucial component in electric wiring, motors, and generators, making it a key resource in the electrification of various sectors.

The potential implementation of tariffs on imported copper into the U.S. has introduced an element of uncertainty into the market. These tariffs could potentially raise costs for U.S. manufacturers and consumers while also impacting global trade flows of the metal. Scott-Gray noted that two-thirds of global visible stocks are now held within the U.S.

Looking ahead, market analysts will be closely monitoring developments related to U.S. trade policy, global demand trends, and supply-side factors to assess the future trajectory of copper prices. The interplay of these factors will determine whether copper can sustain its upward momentum or if a correction is on the horizon.