Copper Hits $9,813 as U.S.-China Dynamics Drive Historic Rally

Copper prices have climbed to $9,813.48 per metric ton in early trading on March 26, 2025, continuing the strong momentum seen in recent days.

This follows yesterday’s historic rally when copper hit an all-time high on the COMEX, with prices surging amid expectations of potential U.S. tariffs and robust Chinese demand.

The copper market experienced a significant rally on Tuesday, March 25, with the COMEX rising $0.1190 to close at $5.1830 per pound ($11,427 per ton).

During the day, May delivery copper reached as high as $5.205 per pound ($11,452 per ton) on the Comex market, surpassing the previous record set in May 2024. The front-month contract has now gained approximately 29% since the beginning of 2025.

Overnight Trading

Asian markets showed continued strength overnight, with Shanghai futures climbing higher. The Shanghai Futures Exchange’s April copper contract (the front-month) closed at 81,900 yuan ($11,277.88) per tonne on Tuesday.

This was 0.75% higher than the September contract, indicating the market has flipped into backwardation. This price structure signals expectations of near-term supply tightness and strong Chinese demand.

Global Market Dynamics

U.S. Market

The U.S. copper market continues to disconnect from global benchmarks, with an unprecedented gap between COMEX and LME prices widening to a record $1,400 per tonne on Monday. This price divergence is creating strong incentives for traders to redirect shipments to the United States ahead of potential tariffs.

Chinese Market

China’s copper market is showing signs of tightening, with the Yangshan premium (a key indicator of Chinese import demand) rising by 114% from early March to reach $75 per ton, the highest level since January. Additionally, refined copper stocks decreased by 4% over the past week, totaling 333,600 tons as of March 24, marking a 13.9% decline compared to the previous year.

London Metal Exchange

The LME copper market has been trading steadily above the $10,000 per tonne level, though still at a significant discount to U.S. prices. The three-month copper price on the LME climbed to $9,925 per metric ton earlier this week.

Market Drivers

Trump Tariff Concerns

The primary driver behind copper’s record rally is the growing concern over potential U.S. import tariffs. Last month, President Trump ordered the U.S. Commerce Department to investigate possible copper tariffs on national security grounds. Goldman Sachs and Citigroup expect the U.S. to impose 25% import levies on copper by year-end.

Supply Redirection

According to Kostas Bintas, Mercuria’s head of metals trading, an estimated 500,000 tons of copper are being directed to the U.S., compared to the usual 70,000 tons per month. This massive redirection is tightening supply in the rest of the global market, potentially pushing LME prices above $12,000 per tonne from the current level of around $10,000.

China’s Economic Measures

Chinese authorities recently unveiled a special action plan aimed at boosting consumer spending by increasing incomes. This follows retail sales growth of 4% in the first two months of the year, the fastest pace since October 2024. As the world’s largest copper consumer, China’s economic activity remains crucial for global copper demand.

Supply Constraints

The copper market continues to grapple with mine supply shortfalls. Top producer Codelco warned that production this quarter will be similar to or slightly below year-ago levels due to maintenance work at its El Teniente underground operation in Chile. Chile’s overall copper output declined by 24% month-over-month in January, reaching a nine-month low.

Expert Commentary

Kyle Rodda, senior market analyst at Capital.com, explained the current market dynamics: “A part of the copper story is China’s stimulus and recovery, the other part is tariffs. We could be seeing a boost in demand at a time when higher prices could restrict the supply side. The weaker dollar (naturally) helps a bit as well”.

An unnamed copper trader noted regarding the Shanghai market backwardation: “The existing backwardation is minimal, indicating that there isn’t a severe supply issue. It’s present because the demand for copper in China remains quite strong”.

Citigroup analysts expect LME copper to hit $10,000 per tonne in the next three months as the global market remains tight.

Supply/Demand Balance

Experts predict a 320,000-ton copper supply deficit in 2025 as demand outpaces supply. This shortfall is being exacerbated by a sharp drop in U.S. copper scrap exports, which are crucial for about a third of global production.

Southern Copper Corporation (SCCO) expects copper production of 967,000 tons for 2025, unchanged from 2024 levels.

Technical Outlook

Copper’s break to new all-time highs represents a significant technical development, establishing strong momentum that could carry prices higher.

The unprecedented price gap between U.S. and international markets creates potential for volatile trading conditions as market participants adjust to the new reality of redirected global supply flows.

Investment Implications

With copper hitting record highs, mining stocks such as BHP Group, Southern Copper, Freeport-McMoRan, Teck Resources, and Amerigo Resources are well-positioned to benefit from this rally.

Southern Copper’s capital investment program for this decade exceeds $15 billion and includes multiple projects in Mexico and Peru that should support long-term production growth.

Outlook

The copper market appears poised for continued strength in the near term as supply concerns, potential U.S. tariffs, and Chinese economic stimulus measures provide strong support.

However, the widening gap between U.S. and global prices creates the potential for market dislocations and increased volatility as supply chains adjust to these new dynamics.

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