Electrification has been the dominant force driving global copper demand in recent decades. It remains so today, and as the trend towards greater electrification continues unabated, it will be so in the future. Few commodity markets are as well and reliably predictable as the copper market in this regard.
This currently makes copper, and naturally also copper mines and their developers, a very attractive and promising investment. In the US, particularly the construction and manufacturing sectors were responsible for the high demand for the red metal in the first half of 2025.
The tariff discussion ignited by US President Donald Trump has impacted copper and its demand in several ways. In the US, fear of tariffs that could be imposed by the American government on copper imports initially led to significantly higher demand for copper in the first months of the year.
The current situation in the US is very comparable to that of aluminum. Donald Trump has already introduced higher tariffs on aluminum imports. A comparable step for copper is therefore plausible. Whether it actually happens remains to be seen. However, the market’s fear of new tariffs remains high. Many copper consumers in the US therefore believe that it wouldn’t hurt to have a bit more copper in stock in this situation.
High Premiums Paid for Copper in the US in H1 2025
As a consequence of this extremely strong demand, copper on Comex was at times up to 11% more expensive than in London, the world’s leading market for copper trading. Typically, the premium to be paid in the US compared to the London market averages about 0.5% over many years. The price difference between the individual trading venues was therefore not only significant, but extreme.
In the first five months of 2025, the spot price for copper rose by 10.35%. Buyers in the US even had to contend with a price increase of 16.17% by the end of May. The increase has continued since then, as May merely represented a consolidation phase for the extremely strong rise in April. During May, prices recovered from the tariff shock at the beginning of the month. June brought a continuation of the increase, pushing the price for a pound of copper to currently reach the range of $5.17 per pound.
However, it wasn’t just copper prices themselves that developed positively. The stock prices of copper producers also saw strong gains. Larger corporations were ahead in this regard. Their stock prices improved by 7.76%, while the shares of smaller copper producers saw “only” a 6.39% increase.
Donald Trump Only Briefly Rattled the Copper Market
Donald Trump’s tariff shock also caught the copper market off guard in early April, leading to a massive price drop. However, this was immediately bought back. A decisive reason for the rapid re-acquisition of previously sold copper positions was the persistent physical scarcity. It quickly overshadowed emerging concerns about global trade.
At this point, the fundamental data for copper were not very resilient, and they still are today, because as concerns about global trade have subsided, higher growth and thus higher copper demand are now also expected in China. The medium- and long-term outlook is also good and tends to suggest further rising prices, as there is a large gap between supply and demand for copper that mines can hardly close.
Any small increase in copper demand can easily lead to a larger price shock in the market, as copper inventories are comparatively low. Global copper inventories on exchanges have plummeted by 44% since the end of February. This indicates a massive supply shortage, with the sharpest declines observed on the Shanghai Futures Exchange and the London Metal Exchange. Here, copper was rapidly withdrawn from warehouses.
The current development represents a clear reversal compared to the trend from the first half of last year. Back then, rising inventories weighed on prices and eventually brought the rally to a halt. Today, however, copper is an extremely scarce commodity even during periods of normal demand, and the world no longer has large buffers to absorb short-term demand spikes.
China Has Massively Expanded its Copper Processing Capacities
Supply and demand are also increasingly imbalanced because China currently imports significantly more copper than it actually needs. We are currently seeing a situation with copper similar to what is already known from solar modules and wind turbines: In the Middle Kingdom, large capacities for copper refining have been built up in recent years.
This is presumably happening with the approval of the Chinese government, as the newly created capacities, like those for solar systems and wind turbines, far exceed China’s own needs. Money seems to be no object for Chinese companies in this process. They then flood the global market with their products or, in the case of copper, drain it by offering high premiums to producers who ship their copper ore or copper concentrate to China for processing.
Western smelters are paying the price for this. Their facilities are significantly older and thus less productive than the new facilities in the Middle Kingdom. This allows Chinese producers to operate approximately 20% more efficiently. As a consequence of this development, negative smelting charges currently characterize the copper processing landscape.
In normal times, the refinery is compensated with smelting charges for processing copper ore or concentrate into high-purity copper. Currently, however, smelters are paying to even receive copper for refining. If this development continues for long, many smelters in the West will close, and China will eventually control the supply chain for this extremely important raw material as well.
Will China Soon Decide how much Copper Western Countries are Allowed to Consume?
When prices for short-term deliverable material are higher than prices for long-term contracts, it is referred to as backwardation in commodity markets. If it is accompanied by a rising import premium, as in the case of copper, the market gives a classic signal of a genuine global shortage. Further rising copper prices are therefore to be expected.
At the same time, Western countries must act quickly if they want to prevent a situation with copper comparable to that of rare earths, magnesium, or antimony. To do this, existing copper smelters in the West must be maintained and modernized. However, proprietary copper projects must also be developed and brought into production.
At the project level, there are already good approaches. Young companies such as Axo Copper, American West Metals, Altiplano Metals, Aztec Minerals or Nicola Mining have long since begun exploring or developing promising copper properties. Investors who are not afraid of the inherent risks involved with mine developers and explorers would therefore be well-advised to keep an eye on these emerging companies.
The stock prices of these small exploration and development companies have not yet moved significantly, unlike those of the large producers. But with persistent copper scarcity, that is probably only a matter of time.
