How Will Copper and Aluminium Markets Perform in Late 2025?
JP Morgan has released new projections indicating copper prices will average $9,225 per metric ton in the second half of 2025, while aluminium is expected to average $2,325 per metric ton. These forecasts come amid changing global trade dynamics and evolving copper price insights in base metals markets.
Key Price Projections and Current Market Status
The bank's analysis points to several factors influencing these price targets:
- Copper price target: $9,225/mt average for H2 2025
- Current copper price: $9,532/mt (as of mid-May 2025)
- Projected copper moderation: -3.2% from current levels
- Aluminium price target: $2,325/mt average for H2 2025
- Current aluminium price: $2,520/mt (as of mid-May 2025)
- Projected aluminium adjustment: -7.7% from current levels
These projections suggest copper prices may moderate slightly from current levels, while aluminium could see a more significant adjustment downward in the coming months.
Technical Market Fundamentals
JP Morgan attributes copper's resilience to "tight microeconomic fundamentals," despite April's macro-driven selloff that saw an 8% price drop followed by a Q2 recovery. This price action illustrates the complex interplay between macroeconomic forces and metal-specific fundamentals.
For aluminium, the bank notes that "low visible inventory coverage" continues to provide price support. Industry data shows aluminium's inventory-to-consumption ratio at 15-year lows according to JP Morgan's proprietary models, creating a stable price floor despite other market pressures.
Copper's supply-demand equilibrium is particularly sensitive to Asian market inflows, which are expected to increase following the implementation of U.S. Section 232 tariffs. Meanwhile, aluminium price volatility in 2024 was significantly influenced by production disruptions, most notably the Lingqing smelter outages, underscoring how sensitive the market remains to supply shocks.
What Factors Are Driving the Positive Price Outlook?
US-China Trade Tensions Easing
A significant driver behind JP Morgan's optimistic outlook is the recent improvement in US-China trade war impacts:
- The two economic powerhouses agreed to a 90-day suspension of reciprocal tariffs following discussions in Geneva
- This trade reprieve has reduced recession probabilities by an estimated 12% according to JP Morgan's economic models
- Lower recession risk has mitigated downside threats to base metals demand and prices
- Chinese Q3 2025 copper imports are forecast to rise 18% year-over-year amid this tariff reprieve
"Front-loaded Chinese purchases could extend near-term price support," notes JP Morgan's metals team, suggesting that buyers may accelerate acquisitions to capitalize on the temporary trade reprieve.
Historical precedent supports this outlook—the 2023 tariff pause correlated with a 14% copper price surge over just 60 days, demonstrating how quickly markets can respond to improved trade conditions.
Supply-Demand Dynamics Supporting Prices
Several market fundamentals contribute to the positive price environment:
- Section 232 tariff exemptions for EU/Canada are expected to divert approximately 450,000 tonnes of copper to Asia monthly
- Copper's cost curve analysis shows 40% of global copper supply producers operating underwater below $8,900/mt
- Aluminium's rally in Q4 2024 (23% price increase) was partly driven by Biden administration infrastructure bill stockpiling
- JP Morgan's recession probability models—incorporating PMI data, yield curves, and metals demand elasticity—signal reduced downside risks
These factors create a supportive environment for prices in the near term, even as longer-term adjustment factors begin to emerge.
What Risks Could Impact These Price Forecasts?
Copper-Specific Risks
Despite the generally positive outlook, JP Morgan identified several potential headwinds for copper:
- Prices exceeding $9,500/mt could trigger Chinese price sensitivity, with JP Morgan's China survey indicating a potential 9% demand drop at this threshold
- Greater supply is expected to reach Asia as excess shipments to the US decline following anticipated Section 232 tariff market effects on US copper imports
- The 2024 copper surplus (350,000 tonnes) failed to significantly impact prices due to metal being locked in financing deals, a situation that may not persist
- The bank anticipates an eventual unwinding of tight copper market fundamentals as demand downshifts
"While copper fundamentals remain tight today, we expect gradual easing as additional production comes online and economic conditions normalize," notes JP Morgan's analysis.
Aluminium-Specific Concerns
Aluminium faces its own set of challenges that could impact price performance:
- A significant drop in automotive demand could expose aluminium to price decreases later in 2025
- The automotive sector accounts for approximately 25% of global aluminium demand (2.8 million tonnes monthly)
- "Aluminium's link to ICE vehicles leaves it exposed to EV transition laggards," according to analysis from JPMorgan's metal market research
- The 2023 UAW strike caused a 17% temporary drop in North American aluminium premiums, highlighting the metal's sensitivity to automotive disruptions
- The bank maintains caution regarding the longevity of the US-China tariff extension
Industry data shows aluminium's breakeven point at approximately $2,100/mt (based on CRU data), which provides some comfort that there is limited downside beyond JP Morgan's forecasts even in a bearish scenario.
How Are Base Metal Markets Expected to Evolve Through 2025?
JP Morgan's analysis suggests a potential two-phase market development for base metals in 2025:
Phase 1: Near-Term Strength (Current)
- Phase 1 (Q3 2025) projects copper imports to China reaching 480,000 tonnes/month (+22% year-over-year)
- Continued price support from Chinese buyers accelerating purchases
- Maintenance of tight supply conditions, particularly in copper
- Positive momentum from reduced US-China trade tensions
- JP Morgan's proprietary Copper Stress Index currently sits at 59, below the overheating threshold of 68
"Copper's backwardation will ease as LME warrants rebound post-Q3," predicts Citi Research, pointing to changing market structure as the year progresses.
Phase 2: Second-Half Adjustment
- Phase 2 (Q4 2025) forecasts aluminium demand growth slowing to 1.8% (compared to the 5-year CAGR of 3.4%)
- Eventual demand downshifting as economic conditions evolve
- Unwinding of tight microeconomic fundamentals in metals like copper
- More bearish outlook expected in the second half of 2025
- Aluminium's rolling 3-month volatility currently sits at 12.3% versus the 10-year average of 18.1%, suggesting potential for increased price movement
The transition between these phases will likely be gradual rather than abrupt, with key indicators including LME inventory levels, futures curve structure, and physical premiums providing early signals of the shift.
What Does This Mean for Metal Markets and Investors?
The JP Morgan forecast provides several important insights for market participants:
Strategic Investment Considerations
- Price targets: Specific benchmarks for planning and risk management
- Market timing: Potential for stronger near-term performance followed by moderation
- Sector exposure: Automotive industry weakness could disproportionately impact aluminium
- Geographic considerations: Shifting trade patterns may redistribute metal flows globally
- Risk factors: Clear identification of price thresholds and demand concerns
Technical Market Indicators
JP Morgan's analysis reveals several important technical metrics for investors:
- The copper-aluminium spread historically averages 4:1; the current 3.8:1 ratio implies potential convergence
- Automotive sector beta calculations show aluminium at 1.2 versus copper's 0.8 (against the S&P Metals Index)
- JP Morgan's Metals Risk Matrix scores copper 8.2/10 (fundamentals) versus aluminium 6.4/10
- CTAs (Commodity Trading Advisors) currently hold net-long positions of approximately 62,000 copper contracts (near 2021 highs) according to CFTC data
"Portfolios overweight copper should hedge with zinc for macro downturn protection," advises Goldman Sachs in their complementary analysis of the sector.
Practical Implications for Market Participants
Traders and industrial users should consider several action points based on JP Morgan's projections:
- Monitor copper prices approaching the $9,500/mt threshold that could trigger Chinese demand sensitivity
- Track automotive production forecasts as a leading indicator for aluminium demand
- Consider the divergence between copper and aluminium price trajectories for spread trading opportunities
- Watch for early signs of Phase 2 market evolution beginning in late Q3 2025
- Assess inventory levels across both LME and Shanghai exchanges for early signals of market rebalancing
Disclaimer and Considerations
These forecasts represent JP Morgan's analysis based on current market conditions and assumptions about trade policies, economic growth, and sector-specific demand. Actual market performance may differ significantly based on unforeseen economic developments, policy changes, or supply disruptions.
Investors should note that metal prices can experience significant volatility, and forecasts typically have wide confidence intervals. The projected price targets should be considered alongside comprehensive risk management strategies rather than as precise predictions.
FAQs About Copper and Aluminium Price Forecasts
What is driving JP Morgan's copper price forecast for late 2025?
JP Morgan's copper price forecast of $9,225/mt for H2 2025 is supported by the US-China trade reprieve reducing recession probabilities, though tempered by expectations of eventual demand downshifting and unwinding of tight market fundamentals. Cost curve analysis shows 40% of producers underwater below $8,900/mt, providing long-term price support.
How might automotive industry performance affect aluminium prices?
With the automotive sector accounting for approximately 25% of global aluminium demand (2.8 million tonnes monthly), JP Morgan warns that significant weakness in this sector could expose aluminium prices to downward pressure in the latter part of 2025. The 2023 UAW strike demonstrated this vulnerability when it triggered a 17% temporary drop in North American aluminium premiums.
What effect will the US-China tariff suspension have on metal markets?
The 90-day suspension of reciprocal tariffs between the US and China is expected to reduce downside risks to base metals demand and prices in the near term, while potentially encouraging Chinese buyers to accelerate purchases during this window. Historical precedent from the 2023 tariff pause showed a 14% copper price surge over 60 days, suggesting similar short-term strength is possible.
At what price point might copper face resistance?
JP Morgan indicates that copper prices exceeding $9,500/mt could trigger Chinese price sensitivity, with survey data suggesting a potential 9% demand reduction at this threshold. This price level represents an important psychological and economic barrier for market participants to monitor.
How do current metal prices compare to JP Morgan's forecasts?
As of mid-May 2025, copper was trading at $9,532/mt (above the H2 forecast of $9,225/mt), while aluminium was at $2,520/mt (also above the H2 forecast of $2,325/mt), suggesting some moderation is expected in both markets. This represents a projected 3.2% decrease for copper and a more substantial 7.7% adjustment for aluminium from current levels. According to Reuters' recent market analysis, these projections align with broader mining innovation trends that are reshaping metals production and pricing globally.
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