Impact of US Tariffs on Copper Prices
On April 2, 2025, US President Donald Trump announced tariffs, setting a minimum 10% tax on all foreign copper imports. This move has already caused a significant drop in copper prices. As of April 7, London Metal Exchange (LME) three-month copper prices fell to a one-year low of $8,105 per ton, from $9,721 per ton on April 2. Similarly, Shanghai Futures Exchange (SHFE) prices also saw a decline, falling from 79,890 yuan per ton to 73,640 yuan per ton. These price fluctuations indicate the substantial impact of tariffs on global copper markets.
US Tariffs Affect Copper Demand from Key Sectors
The tariffs imposed on automotive imports and home appliances are putting pressure on copper demand. A 25% tariff on imported cars and trucks was implemented on April 3, 2025. A further 25% tax on auto parts is set to take effect in May. In 2024, the US light vehicle market saw a rise in sales to 16.8 million units, while the US imported $23.5 billion worth of home appliances from China. These sectors are major consumers of copper, accounting for a significant portion of global demand. The increased tariffs could depress copper consumption as these industries may scale back production.
Short-Term Restocking May Help Copper Demand
Although the tariffs are expected to reduce copper demand in the long term, there is some short-term optimism. Lower copper prices may prompt copper fabricators to restock their supplies. Data from the SHFE reveals that copper stocks fell from 256,328 tons on March 21 to 225,736 tons by April 3. Downstream buyers have responded to the falling prices by purchasing copper cathodes. This restocking could help stabilize the market temporarily.
China’s Retaliatory Tariffs Impact Copper Scrap Imports
On April 10, 2025, China will implement retaliatory tariffs on US copper scrap. China’s copper scrap imports from the US totaled over 440,000 tons in 2024, making up nearly 20% of its total copper scrap imports. The new tariffs will disrupt this supply chain, with many traders expected to seek alternative sources for US-origin copper scrap. In February 2025, US copper scrap exports fell by 10% compared to the previous year, with the largest reduction in imports from China. The tariffs have made it harder for US exporters to remain competitive, and the price gap between CME and LME prices has further strained the export market.
Limited Impact on Copper Concentrate and Cathode Supplies
Despite the tariffs on copper scrap, China’s domestic copper concentrate and cathode supply is unlikely to face major disruptions. In 2024, China imported just 460,000 tons of copper concentrate and 1,575 tons of copper cathode from the US. These imports represent a small fraction of China’s total supply. We expect the retaliatory tariffs to have a minimal effect on China’s overall copper concentrate and cathode supply.
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