After a record-breaking first half—fueled by tariff threats, supply shortfalls, and a global demand boom—the market is now whipsawed by a rapid surge in LME stockpiles and a tariff U-turn, even as supply risks linger in Chile and China.
China’s Output Peak Hits Ore Crunch
China’s refined copper output is forecast to climb 7.5–12% in 2025, hitting a new high above 13.64 million metric tons and pushing China’s share of global production toward 57%.
Yet, that record relies increasingly on rapid drawdown of domestic inventories and scrap use, as feedstock shortages force some smelters to curb throughput.
Tariff Reversal Topples U.S. Price Premium
President Trump’s latest 50% tariff program applies only to semi‑finished copper goods—wiring, tubing, pipe—not refined copper. As a result, COMEX copper futures plunged by ~20%, unwinding a speculative U.S. premium that had soared to over $3,000/ton.
U.S. imports surged ahead of the expected tariffs, leaving warehouse inventories at record highs – up to 500,000 metric tons, while LME inventories rebounded sharply, eroding the arbitrage that fuelled the rally.
Stockpiles Overflow, Prices Slip
LME copper inventories jumped 14,350 tons to ~141,850 tons, the highest since March. Global stockpile rebalancing contributed to a 0.6% dip in prices in recent days.
Supply Tight in Asia, Surplus in U.S.
While U.S. stockpiles swell, Chinese warehouses remain lean; some estimates show a 55,000‑ton draw in a single week, pushing inventories to decade‑low levels. Supply in Asia remains tight just as downstream demand stays resilient.
Outlook – Cooling Momentum but Underlying Strength Intact
- China’s refined copper production is likely near peak, constrained by diminishing ore availability even as smelters operate at full tilt.
- The U.S. tariff strategy shift dampens speculative price adds, but global fundamentals remain firm. Bearish sentiment driven by excess U.S. stock may be temporary.
- With LME inventories rising and U.S. premium collapsing, price direction will hinge on demand from China and Europe, and whether ore shortages force further capacity limits.
Bottom Line
Copper’s headline rally—fueled by expected sweeping U.S. tariffs—has reversed, but the underpinning dynamics persist: tight supply in China and strong demand remain intact. Expect price swings in the near term, but medium‑term fundamentals keep copper in a tight market.