What’s Going On in the Copper Market?

Our previous blog post was dedicated to lithium. This week, it's copper's turn, and we're taking a closer look at what's stirring in the copper world these days.

Political developments in the United States are creating new waves of uncertainty in global markets. And copper doesn’t escape the turbulence. The market has been unsettled since February, when announcements of a potential tariff on copper imports first surfaced.

As a result, analysts are now warning of a possible collapse in copper prices in the near future.

"Copper should be made in America."

Copper and U.S. trade policy in focus.

The current unrest in the copper market began with a trade investigation initiated by the White House. In February this year, U.S. authorities launched a formal inquiry to assess whether the import of copper poses a threat to national security. This type of investigation, known as a “Section 232 investigation,” grants the president the authority to impose tariffs if deemed necessary to protect national interests. The announcement can be read on the White House homepage here.

One of the concerns is explained by the White House as follows:

"The United States has ample copper reserves, yet our smelting and refining capacity lags significantly behind global competitors. A single foreign producer dominates global copper smelting and refining, controlling over 50 percent of global smelting capacity and holding four of the top five largest refining facilities. This dominance [...] poses a direct threat to United States national security and economic stability."

The White House, February 2025.

The White House has raised concerns about how dependent the global copper supply chain has become. When a single actor effectively controls most of the world’s capacity to smelt and refine copper, U.S. authorities view the situation as vulnerable. The worry is that an unbalanced supply chain could threaten both stability and security, especially since copper is essential for defense technology. 

But there’s more to the story. While the geopolitical spotlight falls on global rivals, the countries most directly affected by potential U.S. copper tariffs are their close partners. In 2024, the top suppliers of refined copper to the U.S. were Chile, Canada and Mexico. Tariffs would therefore hit them the hardest. Still, the message from Washington is clear. “It’s time for copper to come home,” said White House adviser Howard Lutnick during the signing event. Similar to what was said during past trade disputes over steel and aluminum, he blamed foreign producers for hurting U.S. copper production and promised to bring the industry back. “No exemptions, no exceptions.” (Mining.com).

The reaction

When the White House announced potential tariffs on copper imports to the U.S., the market reacted. Normally, investigations like the Section 232 investigation follow a 270-day timeline, giving the market time to adjust. But now, there is talk that the tariffs could be implemented within just a few weeks. This has prompted traders to act quickly, with large volumes of copper being shipped to the U.S. in hopes of beating the tariff deadline (CNN).

The result has been a sharp increase in demand for physical copper in the U.S. market. Prices have risen, especially in New York. At the same time, a large gap has opened between copper prices in the U.S. and the rest of the world.

Copper prices in New York (Comex) have risen above benchmarks in London (LME) and Shanghai (SHFE) over the past few weeks (Mining.com).

The chart shows how New York (Comex) prices have risen above levels in both London (LME) and Shanghai (SHFE). This price gap has created an arbitrage opportunity to buy cheap abroad and sell high in the U.S. But the opportunity comes with risk. If tariffs are introduced before the copper arrives, the trade could quickly become expensive.

According to commodity trader Mercuria, around 500,000 tons of copper are now being shipped to the U.S., compared to the usual monthly import volume of about 70,000 tons. This raises concerns about global supply, especially for China, which is the world’s largest consumer of copper (U.S Global Investors).

Waiting for the Tariffs

Copper is currently navigating an uncertain period, a point underscored by the French bank BNP Paribas, which now warns of a possible collapse in copper prices over the coming months. The bank expects a supply surplus of 460,000 tonnes, primarily driven by reduced global trade. This temporary oversupply is likely to result in a significant price decline (Mining.com).

After reaching a nine-month high earlier in March, copper prices have started to pull back. In London, copper is now trading below 9,800 dollars per ton. What comes next may depend on if or when the tariffs are put in place (Yahoo! Finance).