25-03-2025
Rising Copper Prices Boost Commodity ETF Amid Tariff Fears and China Stimulus
Copper Prices Near Record Highs
Copper has been one of the strongest-performing commodities this year, surging 27% amid concerns over potential US import tariffs and China's renewed stimulus efforts. Copper futures at COMEX peaked at $5.15 per pound last Thursday, approaching the May 2024 record. While prices slightly retreated to $5.12 per pound on Monday, the industrial metal remains in high demand due to its critical role in electrification, AI expansion, and renewable energy transitions. However, supply constraints from limited mineral investment and refining capacity have compounded its price surge.
Trade Policies and Economic Stimulus Fuel Demand
The US administration has launched an investigation into copper imports, citing national security risks and rising reliance on foreign suppliers. This move is widely seen as a precursor to tariffs aimed at countering China's dominance in the copper supply chain. Since the announcement, copper futures have jumped 12% as suppliers rush shipments to the US ahead of potential duties, tightening global supply. Meanwhile, China has outlined aggressive stimulus plans to boost domestic demand, setting a 5% GDP growth target and increasing deficit levels to a three-decade high. Retail sales and industrial output have exceeded expectations, further fueling demand for copper, given China's role as both the world's largest consumer and supplier of the metal. Additionally, a weaker US dollar, down 4% this year, has amplified copper's rally by making dollar-denominated commodities more attractive to global investors.
COPP ETF: A Canadian Investor's Gateway to Copper
As copper prices rally, Canadian investors can turn to the Global X Copper Producers Index ETF (COPP) for exposure. The COPP ETF tracks the Solactive North American Listed Copper Producers Index, offering exposure to copper mining companies listed on select North American exchanges.
The fund has gained significant traction this month, gaining 3.50% this past week, and more impressively 11.29% month-to-date, leading the pack among commodity-related ETFs.
With assets under management of CAD 18.57 million, COPP has also seen inflows of CAD 2.28 million this year, reflecting investor confidence in the metal's continued strength. Given ongoing supply constraints and geopolitical tailwinds, copper remains a key asset to watch in global markets.
Group Data
Fund Specific Data: COPP
