Copper Rebounds As China's Stimulus Boosts Market Sentiment, But US Elections Loom Large

After correcting over 22% since its peak at $5.08 per pound in May, copper finally found its footing after China announced significant stimulus measures. The market is now awaiting Saturday’s comments from China’s Finance Minister Lan Fo’an, who could clarify the stance on further infrastructure spending and commodity demand, which would be positive for copper prices.

However, this rebound is not rooted in supply-side constraints. Chilean state miner Codelco reported a 10.1% increase in copper production in August, alleviating immediate concerns about shortages.

From a performance standpoint, copper miners have had a strong year. The Global X Copper Miners ETF COPX is up 25.7% year-to-date, outpacing the S&P500, tracked by the SPDR S&P 500 ETF Trust SPY, which has gained 22.54%.

Still, JPMorgan warned that U.S. elections could introduce significant volatility into the metals markets.

"Metals markets aren't pricing in significant risk premiums for trade-related outcomes, like higher tariffs, despite this being a concern raised by clients," JPMorgan's Executive Director of Mining Equity Research Dominic O'Kane wrote in a note, according to Bloomberg.

The investment bank also downgraded Anglo American AAUKF from Overweight to Neutral but set its new price target slightly higher, at £23.35 ($30.50). The British multinational miner made headlines earlier this year when BHP's failed $49 billion bid marked a short-term peak in copper prices.

Yet, despite the decline since the peak in May, the long-term bullish thesis about electric vehicles (EVs) remains intact.

Copper's role in EV production—used in wiring and batteries—solidifies its position in the green energy transition. According to Rho Motion, EV sales in the U.S. and Canada continue to grow around 9% year-to-date, and while there has been some volatility in quarterly sales this year, the overall growth trajectory is strong.

IXM's head of refined metals, Tom Mackay, noted that demand for copper in EVs remains healthy despite short-term uncertainties, Reuters reports.

On the technical side, copper is still not in the clear. The metal established a low on Aug. 7, following a broader market selloff. Since then, it rose from $3.95 per pound to a new high of $4.67. Currently, it remains between $4.40 and $4.60, where a decisive break of these levels would open the doors to a more significant move—a feat that might play out after the November elections.

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Image created using artificial intelligence via Midjourney.