The price of copper surged past the significant milestone of $10,000 per ton on Thursday.
This price jump follows weeks of disruption in the global copper trade, triggered by US President Donald Trump’s proposal to impose tariffs on this essential industrial metal.
The tariffs have created uncertainty and instability in the copper market, leading to concerns about potential supply shortages and increased costs for manufacturers who rely on copper.
The rise in price is significant as copper is a key component in various industries, including construction, electronics, and transportation.
ING Group’s analysts said in a note:
Copper prices are up around 14% year-to-date with Donald Trump’s tariff threats triggering a rush of copper flows into the US and tightening supplies elsewhere.
In February 2025, Trump instructed the US Commerce Department to conduct an investigation into the potential implementation of import tariffs on copper.
Source: ING Research
This move was driven by concerns over the impact of copper imports on the domestic copper industry and national security.
The investigation aimed to determine if rising copper imports were causing harm to American copper producers and if such imports could be considered a threat to national security.
Price dislocation
Copper prices reached their highest point since October on Thursday, climbing 0.6% to $10,049.40 a ton on the London Metal Exchange, while prices on New York’s COMEX approached a record high.
The sharp rally in COMEX prices is due to the likelihood of US tariffs.
This has caused COMEX futures to trade near a record premium to those in London, widening the gap with equivalent prices in London.
US prices have increased by over 25% this year, while the benchmark LME price has risen by about 13% year-to-date, according to ING. Copper continues to benefit from the front-running of tariffs.
“There is a further upside risk for copper prices in New York if tariffs are applied; however, the spread risks a pullback if any potential tariffs fall short of expectations,” Ewa Manthey, commodities strategies at ING Group, said in a report.
Stocks rising
Traders have been moving metal from global LME warehouses to the US due to the threat of tariffs.
This shift aims to capitalise on the arbitrage opportunity, leading to a steady increase in CME copper stocks since Trump’s presidential election victory.
The majority of these shipments have originated from South America, with some also coming from Asia. Simultaneously, LME stockpiles have experienced slight decreases.
Source: ING Research
“The investigation may take months, allowing more metal to be shipped to the US before tariffs are imposed,” Manthey said.
The US copper rush could leave the rest of the world tight on copper if demand picks up more quickly than expected.
LME copper warrant cancellations have increased sharply since late February, with Asian inventories experiencing the most significant reductions, followed by those in Europe, ING said.
Orders to remove metal from LME warehouses in Asia have risen to their highest point since August 2017.
Import reliance
The United States depends on copper imports to meet its domestic consumption needs.
In 2024, the US imported approximately 850,000 tonnes of copper (excluding scrap), which accounted for roughly 50% of its domestic consumption, ING said.
Chile was the primary source of these imports, supplying 41% of the total, followed by Canada at 27%.
Source: ING Research
Given the challenges associated with increasing domestic production, it is unlikely that the US will be able to reduce its reliance on imported copper in the near future, Manthey noted.
The US Geological Survey (USGS) reports that America holds approximately 5% of the global copper reserves and contributes around 5% to the worldwide copper mining output.
However, US copper production has been decreasing over the past ten years, with a 20% overall drop, ING said. In the last year alone, production fell by 3%, following an 11% decrease in 2023.
Short-term support expected from tariff risks
“In the long term, tariffs could be bearish for copper and other industrial metals in the context of slowing growth and keeping inflation higher for longer,” Manthey added.
“If US inflation remains persistent or rebounds, it could prompt the Federal Reserve to delay or increase interest rate cuts.”
Demand for copper and other industrial metals is likely to weaken due to the projected growth slowdown in the US and the existing struggles in China’s economy, she said.
The US slowdown is anticipated to be a result of tariffs, while China is already grappling with reviving its economy.
Copper prices will likely stay supported in the near term due to the US investigation into copper imports, according to ING.
This is because of the front-running of tariffs and tightening of the ex-US physical market as more metal is sent to the US before any potential levies.
“Until the result of the investigation becomes clear, US import demand triggered by potential tariffs will continue to offset headwinds from slowing global growth and higher inflation as the trade war ramps up,” Manthey said.
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