The Copper market seems to still need to settle after the US tariff surprise. The Copper price traded on the LME increased slightly yesterday after it had declined last week when US President Trump announced that only semi-finished Copper products would be affected by a sector-specific tariff. This likely led to initial expectations that the Copper stockpiled at COMEX would flow back. At the same time, there is no longer an expectation of higher Copper supply outside the US due to prohibitive tariffs, which is price-supportive, Commerzbank’s Head of FX and Commodity Research Thu Lan Nguyen notes.
Signs of market tightening might push the Copper price higher
“Supporting the price currently may also be the news from Chile. After an earthquake, production at one of the country’s largest Copper mines has been affected. According to Bloomberg, this mine produced 356 thousand tons of Copper last year. This accounts for about 7% of Chile’s total production (based on USGS data for the year 2024) and does not sound like much at first. However, the extremely low treatment and refining charges indicate that raw material is scarce. Any production outages could thus significantly tighten the market. Bloomberg additionally reports that the operating company at the affected mine only has ore stockpiled for a few days, and it is currently unclear when operations can be resumed.”
“The analytics firm Shanghai Metal Markets expects that a shortage of Copper ore will lead to a reduction in metal processing in China, the most important producer country, in the coming months. Based on a survey of Chinese smelters, the company estimates that production will decline by 0.5% this month. For September, it expects a further decline as five smelters with a production capacity of 900 thousand tons have planned maintenance work. Though this might not immediately lead to supply problems, as Chinese production has recently soared from one record level to the next. Any signs of market tightening could push the Copper price higher medium term though, especially if demand picks up with a general economic recovery.”