Key points in this update:
- Copper, a key industrial metal that has yet to be included in Trump's widening catalogue of tariff-hit products, continues to rally on the assumption that it is just a matter of time
- Developments that will underpin prices in the short term before a more long-term structural support emerges, driven by the energy transition—one of our commodity-supportive mega trends
- The US HG copper price is currently trading at a 44.5 cents/lb or 9% premium over the global benchmark price at the London Metal Exchange
- The major stockpile shifts to the US will leave copper stranded in the US while leading to a sooner-than-expected tightening of the global market.
Copper, a key industrial metal that has yet to be included in Trump's widening catalogue of tariff-hit products, continues to rally on the assumption that it is just a matter of time—a belief that has uprooted normal supply and demand dynamics. While Trump's worldwide 25% tariffs on steel and aluminium imports took effect overnight, the copper market is still awaiting the result of an investigation carried out under Section 232 of the Trade Expansion Act. As such an investigation normally takes months to be completed, it has left the door wide open for a massive profitable arbitrage between international prices and those in the US being reflected through the High Grade futures contract in New York.
The May 2025 US copper price (HGK5) is currently trading at a 44.5 cents/lb (USD 877/ton) premium over the global benchmark price at the London Metal Exchange. This near 9% premium will rise to 25% if that is the tariff being implemented following the result of the S232 copper investigation. However, given expectations that such an investigation will take time to complete, we are seeing several price-supportive developments that underpin prices in the short term before a more long-term structural support emerges, driven by the energy transition—one of our commodity-supportive mega trends—that will lead to surging demand for power, particularly towards electric vehicles (EVs), data centres, and cooling, as temperatures rise across the world.
Put simply, the current price spike isn’t due to consumer demand but rather major stockpile shifts to the US, and while it creates a windfall for traders who are able to source and ship copper to the US, these flows, most of which will then be left stranded in the US until consumed, will exacerbate an already tight global market into the second half of 2025. By Q3 2025, Goldman Sachs estimates 45-60% of global reported copper inventories could be in the US, which accounts for just 6% of global refined demand—leaving the rest of the world with very low stocks of this important transition metal.
These factors are the main reasons why the HG copper future trades up 21% year to date while London has ‘only’ managed a 12% increase so far, and it highlights how tariffs continue to uproot normal market behaviour, similar to what we saw earlier this year in the silver and gold markets, and how these forces can mute the focus on a global economic slowdown and its potential negative impact on demand.
So far today, the HG futures contract in New York trades up 2% at USD 4.8650 while in London the LME copper contract has added 1.2% to trade around USD 9,780 per ton, or USD 4.436 per pound.
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Published by:
Jaxon Maddox