FACTBOX: US copper prices tumble in response to scaled-back tariffs

Copper prices in the US plunged after the Trump Administration announced that it would impose a 50% tariff on imports of semi-finished copper products, while excluding less refined materials like copper ores, concentrates and cathodes.

The proposed 50% tariff rate, as outlined by US President Donald Trump, aligns with the recently established tariffs on steel and aluminum.

The policy ordered the Department of Commerce to take steps to force a quarter of input for refined copper, such as copper ores, concentrates, mattes, cathodes and anodes to be produced and sold in the US starting in 2027. The amount increases to 30% in 2028 and 40% in 2029.

Trump also directed the Commerce Secretary to expand the tariff to more derivative copper products within 90 days of the proclamation.

The tariffs, which will come into force Aug. 1, follow months of speculation surrounding the finer details of the US trade policy on copper. In recent months, a surge of copper imports flooded the US, fueled by higher domestic copper prices as traders sought to get ahead of the anticipated tariffs. The surge has created huge US copper inventories, which will now be available for export.

Trump's announcement triggered an immediate market response, with COMEX copper futures falling more than 20% as traders reacted under the assumption that the tariffs would be extended to refined metal.

"With the exclusion of refined copper from the tariffs, there is now potential for these large stocks recently shipped to the US to be re-exported, said Ruilin Wang, senior analyst at S&P Global Market Intelligence. "This could lead to an oversupply in Asian and European markets, exerting downward pressure on copper prices in the coming months."

Surging demand

Copper is a critical metal for a wide variety of products and applications, including electronics, transportation, power transmission and distribution, building construction and industrial machinery.

Applications aligned with the energy transition, such as EV batteries and storage, wind energy, solar photovoltaics and other low-carbon energy technologies, are also heavily dependent on copper components.

Trump's announcement comes as the US and the rest of the world brace for a dramatic surge in copper demand over the coming decade, fueled by expanding electrification. With domestic consumption of refined copper estimated at 1.62 million mt in 2024, Market Intelligence projects US demand will increase by more than 30% by 2035.

US copper production

The US has more than 275 million mt of copper reserves and resources, enough to meet the nation's projected demand for the foreseeable future; however, new US mining projects currently average 29 years to begin production.

According to Market Intelligence, the US produced approximately 908,000 mt of refined copper in 2024. Production was focused primarily on Arizona, complemented by smaller volumes from Michigan, Missouri, Montana, Nevada, New Mexico and Utah.

More than 32% of the US copper supply comes from recycled sources. While US recycling rates can be increased significantly, copper products are durable and can last decades, limiting the amount of copper currently available for recycling. While recycling more copper in the US for the domestic market is an attractive sourcing option, recycling capacity must be increased to accommodate this retained scrap.

Import dependence

Despite its significant domestic copper mining and refining capacity, the US remains highly dependent on imported volumes, with net imports accounting for approximately 44% of demand.

Official customs data from the US Department of Commerce shows that the US imported approximately 922,000 mt of refined copper and copper alloys in 2024. Chile is the largest import source, accounting for 70% of total import volumes, followed by Canada (17%) and Peru (7%).

Prices

Copper futures prices for September delivery on the COMEX were trading 22% lower at $4.3700/lb as of 1030 GMT, exchange data showed.

As a result, the spread between the COMEX and London Metal Exchange prices flipped to a discount after trading at a significant premium in recent weeks. The LME copper price is considered the global benchmark and is used by major players such as China for copper trade.

In China, Platts, part of S&P Global Energy, assessed CIF China clean copper concentrate treatment and refining charges at minus $40.80/mt and minus 4.08 cents/lb, respectively, July 31, down 30 cents/mt and 0.03 cent/lb from July 30.

The Platts Chinese copper import premium was assessed at $58/mt plus London Metal Exchange cash, CIF China, July 31, for LME-registered normal brands of electrolytically refined cathode, unchanged from July 30.