Copper Retreats After Sharp Rally as Tariff Deadline Approaches

Market data from July 22, 2025, confirms copper prices dropped to $5.58 per pound, down 0.3% from the previous day.

The past day saw market participants digest consequences of the imminent 50% United States tariff on imported copper, which will activate August 1.

Market sources tie this drop to profit-taking following a steep rally across July, in which the price jumped 14% over the past month and more than 34% over the year.

During the last 24 hours, trading remained volatile. U.S. copper futures settled at $5.6105 per pound on July 21, with volumes hitting over 20,800 contracts.

Transactions reflected accelerated hedging as buyers rushed to secure supplies before the new tariff triggers. Major exchanges including the London Metal Exchange (LME) watched copper prices reach $9,860 per metric ton overnight before sliding.

Asian markets responded to the U.S. policy move with modest pullbacks, and Shanghai Futures Exchange contracts mirrored the international correction.

Underlying these moves, official reports highlight shrinking Chinese exports, which fell 6.27% in June compared to May. This reinforces narratives of constrained physical supply globally, just as financial flows widened into copper-backed investment vehicles.

In the second quarter, copper-focused ETFs saw the strongest inflows since the third quarter of 2024, totaling $23.7 million, markedly up from prior quarters.

Investors targeted miners exposed to North American supply chains, with some viewing the U.S. policy as an incentive to move production domestically.

Technical analysis provides a clearer view of the preceding market behavior. The daily chart for July 22 shows copper breaking out above earlier resistance, boosted by the tariff announcement.

Price hugged the upper Bollinger Band during the rally, signaling high volatility and an overheated spot market, but retreated as the band widened and momentum cooled.

The Relative Strength Index hovered just below the 70 mark, denoting a near-overbought condition before the pullback. The Moving Average Convergence Divergence (MACD) remains positive, though recent histogram bars reveal waning momentum as traders book profits.

The 50-day and 200-day moving averages continue sloping upward, reinforcing a robust medium-term uptrend, though short-term exhaustion appears. The four-hour chart substantiates the daily readings, showing support at $5.50 per pound holding overnight.

RSI readings on this timeframe pull back from extreme levels, while the MACD histogram flattens, suggesting consolidation and reduced immediate buying pressure.

Volumes spiked with the initial reaction to the U.S. policy but tempered soon after, endorsing the view that participants have repositioned ahead of clarity on trade rules.

Fundamentals remain tight, with inventories on Western exchanges trending lower and demand from manufacturing and electrification projects solid.

However, the tariff-induced scramble has left U.S. buyers facing the highest premium globally, while producers in Canada and Chile seek alternative markets.

Over the next days, all eyes will remain on how trade volumes adjust, and whether support at $5.50/lb will persist ahead of August.

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