China-U.S. trade negotiations make progress, copper prices are expected to hit historical highs

According to the Zhitong Finance APP, as China and the United States are about to reach a comprehensive agreement to ease trade tensions, a major risk to global economic growth has been alleviated, and copper prices are expected to hit historical highs. Last weekend, the closing price of copper on the London Metal Exchange (LME), which serves as the global benchmark, was only 1.3% away from its historical peak. On Monday, market sentiment showed positive signals in advance: New York copper futures prices rose by as much as 2.4%, while crude oil prices and the U.S. stock market also rose simultaneously. As of the time of writing, copper prices on the New York Mercantile Exchange (Comex) rose by 1.45%, and copper prices on the London Metal Exchange (LME) increased by 0.75%, reaching $11,027 per ton. U.S. and Chinese trade negotiation representatives concluded talks last Sunday, which seem to have laid the groundwork for the two presidents to finalize an agreement later this week. U.S. Treasury Secretary Scott Basset stated that the previously threatened 100% tariffs by Trump "are no longer under consideration," and China will also suspend its plan to expand rare earth export controls for one year. In May 2024, copper prices reached a historical high of $11,104.5 per ton; earlier this month, copper prices again touched the $11,000 mark. Subsequently, due to both the U.S. and China taking a hardline stance on the eve of trade negotiations, copper prices fell into a period of volatility. So far this year, copper prices on the London Metal Exchange have risen by 25%, a strong performance mainly attributed to a series of supply disruptions from major copper-producing countries. In September, a fatal accident occurred at Freeport-McMoRan Copper & Gold's (FCX.US) large Grasberg mine in Indonesia, leading the company to lower its copper sales forecast. Additionally, Ivanhoe Mines Ltd.'s Kamoa-Kakula mine in the Democratic Republic of the Congo also faced significant production setbacks. The depreciation of the dollar this year has further provided upward momentum for copper prices. Since commodities are priced in dollars, a weaker dollar makes them more attractive to investors. Since January, the dollar index has fallen by more than 7%, driven by investor expectations of further interest rate cuts by the Federal Reserve. The trend in copper prices also reflects a general optimism in the market regarding energy transition. BHP Group (BHP.US), the world's largest mining company, expects global copper demand to grow by about 70% by 2050 and has identified copper as a key growth opportunity to focus on