The global copper market is experiencing turbulent times. After a record rise to an all-time high of $5.28 per pound at the end of March, a dramatic crash to $4.05 followed in early April – a decline of more than 23 percent within just two weeks. The main drivers of this extreme volatility: the intensifying trade war between the US and China, as well as growing economic concerns. For German industry, particularly the automotive and electrical sectors, this development could have far-reaching consequences.

Trade War as a Price Driver and Burden

The price rally in the first quarter of 2025 was largely driven by the Trump administration’s announcement to impose comprehensive tariffs on a wide range of imports, including copper. This triggered a veritable race to ship as much of the reddish metal as possible to the US before the tariffs took effect. Data from the Chinese customs authority show that exports of refined copper increased by an impressive 119 percent in January and February compared to the previous year.

“A lot of copper has flowed into the United States, attracted by higher prices there, which led to lower imports,” a trader confirmed to Reuters news agency at the end of March. According to estimates by the Mercuria Energy Group, about 500,000 tons of copper were on their way to the US at that time – compared to regular monthly imports of only 70,000 tons.

However, the situation changed dramatically when the Trump administration imposed a new round of “reciprocal” tariffs in early April, which were significantly more burdensome than analysts had expected-and China responded with retaliatory measures. US tariffs on Chinese goods have now risen to 145 percent, while China has increased duties on US imports from 84 to 125 percent. This escalation caused copper prices to crash, as fears of a possible recession and geopolitical tensions weigh on demand for industrial metals.

Tight Supply Situation Despite Price Decline

Despite the recent price decline, the physical supply situation remains tight. According to Mercuria estimates, copper demand will exceed supply by 320,000 tons this year. Production problems also contribute to this deficit: Chilean copper company Codelco recorded a 24 percent production decline in January, while a major power outage in Chile at the end of February impacted mining activities in the world’s largest copper-producing country, including BHP’s Escondida mine, the world’s largest copper mine.

The massive diversion of copper stocks to the US also means that the rest of the world, including the main consumer China, which represents about half of global demand, is facing insufficient inventories.

Impact on German Industry

For German industry, which heavily relies on copper imports, the current market volatility poses a significant challenge. Copper is an indispensable raw material for the automotive industry and the electrical sector – two key sectors of the German economy.

According to the German Copper Institute, copper is widely used in automobiles, especially in electrical parts and heat transfer systems. The metal’s importance is particularly relevant for electromobility: an electric car requires about three to four times as much copper as a vehicle with a conventional combustion engine. Given the ambitious electrification goals of German automakers, price volatility and potential supply shortages could drive up production costs and strain supply chains.

The electrical industry, another cornerstone of the German economy, is also heavily dependent on stable copper prices. Due to its excellent electrical conductivity, the metal is a central raw material for the production of batteries, wires, and cabling. The current market situation could therefore affect the competitiveness of German companies in this sector.

Stocks and ETFs Under Pressure

The turbulence in the copper market is also reflected in the stock prices of relevant companies. Freeport-McMoRan (FCX), one of the world’s largest copper producers, recently warned that US tariffs could lead to a potential 5 percent increase in the cost of goods sold (COGS). The company’s stock has shown significant volatility in recent weeks and is currently trading at around $37, well below the 52-week high of $55.24.

The stock of German copper company Aurubis is also under pressure. With a market capitalization of about 3.34 billion euros, the company is feeling the effects of global market turbulence. For investors looking to invest in copper, the situation remains challenging, as both direct investments in producers and copper ETFs are affected by the ongoing uncertainty. A comparison of the price development of copper price, Aurubis and Freeport-McMoRan shows a clear correlation, with the stocks of producers tending to come under greater pressure in recent weeks than the commodity price itself.

Cautious Stabilization in Sight?

After the dramatic collapse in early April, copper prices have recently recovered slightly. One reason for this is President Trump’s announcement to suspend tariffs for most of the world for 90 days – however, China remains explicitly excluded. This development has led to a cautiously more optimistic assessment. On April 15, US bank Citi raised its three-month forecast for copper to $8,800 per ton, up from $8,000 eight days earlier.

Nevertheless, the situation remains fragile. The combination of trade tensions, geopolitical risks, and economic concerns is likely to continue to weigh on the copper market. For German industry, this means that it must prepare for ongoing price fluctuations and potential supply bottlenecks – an additional challenge in an already demanding economic environment.

Conclusion: Copper as a Seismograph of the World Economy

The current volatility in the copper market is more than just a sector-specific phenomenon. As an important indicator of global economic performance – copper is often referred to as ‘Dr. Copper’ for a reason, as it seems to have a ‘doctorate in economics’ – the price fluctuations signal profound uncertainties about future economic development.

For German companies, especially in the automotive and electrical industries, it will be crucial to adapt their procurement strategies and strengthen risk management measures. Diversifying supply sources, long-term contracts, and possibly increased investments in recycling could be ways to cushion the effects of market volatility. One thing is clear, however: The copper market will remain an important factor that the German industry needs to monitor closely.

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