Tension in the copper market

The red metal plays a key role in the global transformation process towards a digitalized and more climate-friendly economic future. Sectors such as construction, energy supply and transportation account for the majority of global consumption. However, there are also new drivers: power lines for renewable energies, electromobility and, above all, data centers for artificial intelligence.

There has been a lot of movement on the copper market in recent weeks. One of the reasons for this was President Donald Trump's announcement that he would impose an import tariff of 50 percent on copper from August 1, 2025 (CNN Business, July 8, 2025). The political background: Washington increasingly sees the domestic supply of critical raw materials such as copper as a national security issue and aims to reduce dependence on copper imports by developing a domestic copper industry. How quickly this goal can be achieved is questionable. New mines and smelting plants generally take several years to come on stream, while import declines need to be replaced as soon as possible.

Following Donald Trump's announcement, the COMEX copper price rose by more than 13 percent, the sharpest daily increase since 1968 (The Wall Street Journal, 08.07.2025). At the same time, a large price gap opened up with the LME (London Metal Exchange). On July 8, 2025, US copper was trading at up to USD 2,600 per tonne above the price on the LME (CNBC, 09.07.2025). In the short to medium term, such differences also jeopardize the competitiveness of American industrial companies, which now have to reckon with significantly higher material costs.

The current market structure on the futures market shows "backwardation", where spot prices are higher than longer-term futures prices. This indicates acute shortages and high physical demand. China, which accounts for more than half of global copper consumption, has recently been buying to cover demand. Chinese refineries had hedged against price declines in the copper market with short positions during a phase of economic weakness, but had to liquidate these due to the unexpectedly strong rally, which further increased the upward pressure (NZZ The Market, 04.07.2025).

In addition, the continuing depreciation of the US dollar is leading to a further price increase for US buyers. As commodities such as copper are generally traded in US dollars, a weaker greenback makes imports more expensive for American buyers, even if the global market price remains unchanged. Companies that are already facing rising material costs due to the announced import tariffs might come under additional pressure as a result.

While demand is growing, supply remains limited. New copper mine projects in the USA take an average of over 29 years from the start of exploration to commissioning, a figure that is only exceeded by Zambia (The Wall Street Journal, 10.07.2025). Even if there is the political will to promote the domestic copper sector, structural deficits are difficult to eliminate in the short term.

From a global perspective, supply growth is also lagging behind demand: many easily accessible deposits have already been developed, and new deposits are often located in politically unstable regions or require high levels of investment (Financial Times, 21.02.2025). Meanwhile, according to the consulting firm Wood Mackenzie, the share of "secondary copper" obtained from recycling in the global copper supply is set to increase from around one third at present to just under 50 percent, but forecasts suggest that this will still not be enough to meet demand.

However, the copper extracted from primary sources would have to be increased annually by the amount of the world's largest copper mine (Escondida, Chile) in order to meet demand; a project that appears unrealistic given the lengthy approval processes and political hurdles (The Wall Street Journal, 11.07.2025). This suggests that copper could remain a scarce commodity in the coming years.