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Copper Hits a Three-Month High: ETFs in Focus

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Copper climbed to a three-month peak as tight supply conditions persisted and market sentiment improved on hopes of new U.S. trade agreements with major global economies.

Backwardation Highlights Supply Tightness

Spot copper contracts are trading at significant premiums compared to those for later delivery — a market structure known as backwardation, which reflects short-term supply shortages. A notable decline in inventories on both the London Metal Exchange (LME) and in China has contributed to this squeeze.

This inventory drop followed a surge in copper shipments to the United States, as traders aimed to preempt potential White House tariffs by moving record volumes earlier.

Tom/Next Spread Signals Ongoing Tension

The Tom/next spread — which reflects the premium of copper for next-day delivery over contracts maturing a day later — widened on July 1, 2025. Last week, it peaked at $98 per ton, the highest level seen since 2021, further underscoring the market’s supply strain.

Copper Prices Near $10,000 Per Ton

Copper price rose by 0.9% to $9,960 per ton on the LME, after briefly touching $9,984 — the highest level since March 27. A broader risk appetite also improved, fueled by rising equity markets and optimism around potential trade deals between the United States and key partners.

Green Energy Transition and Dollar Decline

The rising demand for copper, fueled by the green energy transition, combined with a decline in the U.S. dollar in the first half of 2025, drove copper prices higher. Note that Invesco DB US Dollar Index Bullish Fund (UUP - Free Report) lost about 9.4% in the first half of 2025.

If the U.S. Federal Reserve reduces interest rates ahead, weakening the dollar will make the dollar-priced copper more attractive to international buyers.

ETF Beneficiaries

Against this backdrop, below we highlight a few exchange-traded fund (ETF) plays that could gain amid a copper rally.

Copper ETFs

United States Copper Index Fund (CPER - Free Report)

The underlying SummerHaven Copper Index Total Return reflects the performance of the investment returns from a portfolio of copper futures contracts on the COMEX exchange. It charges 104 bps in fees.

Copper Miners

Global X Copper Miners ETF (COPX - Free Report)

The underlying Solactive Global Copper Miners Total Return Index is designed to reflect the performance of the copper mining industry. It comprises selected companies globally that are actively engaged in some aspect of the copper mining industry, such as copper mining, refining, or exploration. The fund charges 65 bps in fees.

Country ETFs – Chile and Peru

iShares MSCI Chile ETF (ECH - Free Report)

iShares MSCI Peru and Global Exposure ETF (EPU - Free Report)

Other main beneficiaries of the copper boom will be Chile and Peru, both possessing substantial reserves of green transition minerals, such as lithium and copper. These countries are expected to benefit from increased investment and higher export demand, with Chile holding approximately 21% of the global copper reserves. Peru has about 9% share of the global copper reserves.

 


 

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