Copper Retreats from Record Highs as Tariff Concerns Drive Market Volatility

The copper market opened at $5.0455 per pound in early morning trading on March 28, 2025, reflecting a continued pullback from the near-record levels seen earlier this week.

This represents a 3.48% decline from yesterday’s closing price, as traders continue to assess the potential impact of US tariffs and take profits following the recent rally.

Copper prices have retreated from Wednesday’s unprecedented high of $5.3740 per pound ($11,840 per tonne), which marked the metal’s highest level in recent history.

The sharp reversal began during Wednesday’s session when prices topped at $5.374 before reversing intraday to close at $5.243, forming what technical analysts describe as a candle with a long upward pointing shadow – typically a warning sign of excessive buying pressure meeting significant resistance.

Yesterday (March 27), this downward momentum continued with copper trading at $5.2275 per pound in early morning, representing a 0.29% decline from the previous day’s close.

The London Metal Exchange (LME) three-month copper contract settled at $9,787.00 per tonne, down from the previous day’s $9,847.00. Overnight trading saw continued profit-taking, bringing us to the current level of $5.0455, though copper still maintains approximately a 27% gain year-to-date.

Global Market Performance

London Metal Exchange (LME): The benchmark three-month copper contract on the LME closed at $9,787.00 yesterday, down from $9,884.00 on March 26, continuing a downward trend after peaking earlier in the week.

LME copper stocks currently stand at around 224,600 tonnes based on recent reports, showing a slight decrease from previous weeks.

COMEX (US): The premium between prices on New York’s Comex and the LME remains elevated at nearly 12%, creating significant incentives for traders to move copper to the US ahead of potential tariffs. This premium approached record highs reached in mid-February, reflecting ongoing supply concerns in the US market.

Shanghai Futures Exchange: The April copper contract was recently trading in backwardation (near-term prices higher than future prices), signaling near-term supply tightness in the Chinese market. Earlier this week, the contract was reported at 81,900 yuan ($11,277.88) per tonne.

Market Drivers

The primary catalyst for copper’s recent volatility remains concern over potential US tariffs. Market speculation has intensified that the Trump administration will implement copper import tariffs in weeks rather than months, with many analysts projecting tariffs of up to 25%.

“Everyone sees demand for copper as very strong and they all ask for more copper,” Maximo Pacheco, chairman of Chilean state-run producer Codelco, stated in a recent interview, noting increased inquiries from US customers amid tariff concerns.

The differential between US and global copper prices has created significant arbitrage opportunities, with Goldman Sachs and Citigroup both anticipating 25% import levies on copper by year-end. This expectation is driving US buyers to secure supplies in advance of any tariff implementation.

Natalie Scott-Gray, senior metals demand analyst at StoneX, noted earlier this week that copper’s rise is being driven “solely by supply concerns surrounding the potential for universal tariffs to be placed on all imports of copper into the US,” highlighting that the US is “heavily reliant on foreign copper, with imports accounting for around 45% of demand”.

Technical Analysis

Copper’s technical indicators present a mixed picture following this week’s volatility. Prior to the pullback, moving averages showed a bullish trend with all key periods (5, 10, 20, and 50-day) indicating upward momentum. The RSI (Relative Strength Index) stood at 61.86, still in bullish territory but pulling back from overbought conditions.

The price action on March 26-27 created what technical analysts identify as a potential reversal signal, with the long upward shadow on Wednesday followed by a supply-side controlled candle on Thursday.

This pattern suggests the market has likely reached at least a temporary equilibrium point, though it doesn’t necessarily indicate a definitive top.

Key support levels to watch include the short-term uptrend around $5.00 and the static demand zone at $4.906-5.027. A break below these levels could signal a more significant correction, potentially similar to the reversal seen in May-June last year.

Fundamental Outlook

Despite the short-term pullback, copper‘s longer-term fundamentals remain strong. The global push toward electrification continues to drive unprecedented demand for copper, with electric vehicles requiring 2-4 times more copper than traditional vehicles (approximately 83kg versus 23kg).

Supply constraints persist in major copper-producing regions, with Chile and Peru experiencing various disruptions ranging from labor disputes to adverse weather conditions.

New mine development has stagnated, with the average lead time from discovery to production exceeding 15 years, creating a substantial lag between rising demand and new supply.

American buyers are actively looking to source more copper from countries like Chile and Peru amid the broader buildup of stockpiles, while some metal from Mexican and Canadian mines may be diverted to Europe following Trump’s sweeping tariffs on key US trading partners.

Conclusion

The copper market appears to be in a period of consolidation following this week’s exceptional volatility. While prices have retreated from record highs, the fundamental supply-demand imbalance and ongoing concerns about US tariffs continue to provide support.

Traders should monitor key technical levels and policy developments closely in the coming days as the market digests recent gains and adjusts to evolving trade dynamics.

Even with the current pullback, copper has increased approximately 27.36% since the beginning of 2025, highlighting the metal’s strong performance amid global economic shifts and policy uncertainties.

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