Quick Bites: Copper Hits Record High
The copper price has surged toward an all-time high on concerns of potential Trump tariffs, alongside China’s stimulus measures and a weak US dollar (USD).
Copper futures soared past $5.20/pound last week, reaching a new high amid reports that President Trump will impose copper import tariffs within weeks, accelerating his original timeline. Trump’s initial directives suggested copper tariffs would take effect later this year, citing national security concerns. The developments triggered a surge in US copper imports, with recent shipments totalling 500,000 tons (way more than the normal 70,000 ton monthly average) as traders rushed to secure supplies ahead of the tariffs. Adding to the bullish momentum, Glencore suspended copper shipments from its smelter in Chile due to an issue affecting the plant’s furnace.
Copper over last 12 months
Source: Trading Economics
Copper is one of the best market performers this year, up 27%. The industrial metal has become increasingly crucial, with demand surging for electrification in battery powered vehicles, the artificial intelligence (AI) boom, and the world’s transition to renewable energy.
Adding to the price pressure, copper has seen supply constraints due to a lack of mineral investment and reduced refinery capabilities. Against the backdrop of undersupply, Trump’s tariff threats, China’s renewed stimulus measures, and the USD’s weakness this year have collectively contributed to the price surge.
Trump’s copper import probe shifts shipment to the US
Last month, President Trump signed an executive order to investigate the nation’s imports of copper to address the threat to national security and economic stability. “The United States faces significant vulnerabilities in the copper supply chain, with increasing reliance on foreign sources for mined, smelted, and refined copper,” stated the White House. The order is considered a precursor to copper’s import duties, competing with China’s dominance in the metal supply chain, which triggered the spike in copper prices.
China plans to boost domestic consumption
Renewed growth in China is adding to copper’s bullish case. At the government annual meeting, China set its gross domestic product growth target at 5% and raised its deficit level to a 30-year high, followed by further stimulus measures to bolster its economy.
Earlier this month, China’s news agency Xinhua reported that the government will “vigorously boost consumption” and “expand domestic demand in all directions.” The plan includes measures to support domestic spending, raise household income, and provide childcare subsidies.
China’s retail sales rose 4% in the first two months, the fastest pace since October last year. Additionally, both industrial output and fixed-asset investment grew more than estimates in February.
China is the world’s largest copper supplier and consumer, as well as a key player in driving global green energy transitions. These announcements, alongside positive economic data last week, further added to the copper price’s upside momentum.
The USD’s weakness lifts metal prices
The USD has weakened against the other major currencies in the G-10 group since mid-January, with the dollar index down 4% this year. A widening global trade war sparked risk-off sentiment, leading to selloffs in the US stock markets and a decline in the USD. In the Federal Open Market Committee (FOMC) meeting last week, the bank’s forecasts show expected slower economic growth and higher inflation.
A weakened greenback tends to push up commodity prices, as they are priced in USD – one further reason for copper’s rally.
Australia’s copper production
Australia’s copper production accounts for roughly 4% of global production, with the country being the sixth-largest producer in the world. The major producers globally are Chile, Peru, Congo, and China.
In 2024, Australia produced 800,000 metric tons (MT) of copper, a slight increase from the 778,000 MT produced in 2023. Australia holds a substantial portion of the world’s copper reserves, with 10% of global reserves, ranking third after Chile and Peru.
BHP’s Olympic Dam is Australia’s largest single copper mine, and South Australia is home to 70% of the nation’s copper supply, with BHP ramping up operations in the area. Australia’s copper exports are expected to grow at a CAGR of 8% between 2023 and 2027.
