As recently as February, Citi Bank’s commodity analysts had predicted a declining copper price and expressed their expectation that the price for the red metal would fall to $8,500 per ton in the second quarter of 2025. In light of US President Donald Trump’s tariff policy, this forecast has since been retracted. In the short term, Citi Bank now expects a copper price of $10,000 per ton. However, weaker copper prices are still anticipated in the medium term.
Last week, $9,970 had to be paid for a ton of copper at the London Metal Exchange (LME). Currently, the demand for copper is very high. However, this high demand is not so much due to industry needing more copper because of a robust economic situation, but primarily due to US President Donald Trump’s tariff policy.
Since he announced his intention to impose tariffs on the import of foreign goods and raw materials into the USA, these are being imported into the USA in large quantities to still benefit from duty-free prices. After Donald Trump signed an executive order to initiate a review of copper imports under Section 232, prices immediately rose due to increased copper deliveries to the USA. The investigations initiated by the US President assess the impact of imports on national security.
Large Commodity Traders Like Glencore Are Already Reacting
As reported by Bloomberg news agency, large commodity traders such as Glencore and Trafigura have started delivering copper to the USA to maximize their profits before possible further tariffs are announced by the White House. As a result of this development, copper in the USA is already 0.6 percent more expensive than copper in London. While $9,770 per ton of copper had to be paid at the LME on Wednesday of the previous week, the price at Comex in New York was already at $4.87 per pound, which is $10,071 per ton.
Given the current development, Citigroup expects that the LME copper price will also reach the $10,000 per ton mark in the next three months. The bank believes that the global market will remain tight until the timeline for US import tariffs becomes clearer. “We expect the tightness in the physical market outside the US to persist until May/June, temporarily offsetting price pressures from broader US tariff announcements,” Citigroup analysts wrote in an email.
However, Citi Bank does not currently view this price increase as permanent. Although their own February forecast, which still anticipated a price decline to $8,500 per ton, has been withdrawn, it is clear that the current price increase is primarily a result of US tariff policy and the uncertainty it has caused. Therefore, Citi analysts continue to expect a price decline. It will begin “once the tariff-induced US copper import demand collapses, which we expect as the implementation of the Section 232 copper protective tariff draws closer.”
Even Without Donald Trump’s Tariffs, the Copper Market is Currently Dominated by Supply Shortages
This view is remarkable because the copper market is currently characterized by supply shortages. In Chile, the country with the world’s highest copper production, output fell by 24 percent in January compared to December 2024. Chile’s copper production thus fell to a nine-month low. This is happening at a time when smelter demand is high and continues to rise.
Morgan Stanley, another US investment bank, also expects rising copper prices in view of potential US tariffs. “As the tariffs have not yet been implemented, there is a strong incentive to send metal to the US, which is also tightening markets in the rest of the world,” the bank explained.
This development could be further intensified by investors. “Betting on rising prices for a commodity in contango can be challenging as the futures price ‘rolls down’ to the spot price. However, in backwardation, it can ‘roll up,’ and this shift can often lead to inflows from investors,” the bank explained.
