Copper Steadies Near $9,800 as US Tariff Fears and Chinese Stimulus Drive Historic Premium

Copper prices held steady in early trading on Tuesday, with LME copper settling at $9,813.48 per tonne as of 6:58 AM GMT.

This represents a slight pullback from yesterday’s close but maintains the metal’s position near five-month highs as markets continue to process potential tariff implications and strong Chinese demand.

Copper has been one of the market’s standout performers in 2025, surging over 27% year-to-date. Yesterday, COMEX copper futures approached record territory, coming within two cents of the all-time high of $5.20/lb set in May 2024 before pulling back to around $5.12/lb ($11,288/tonne) by midday.

The metal’s performance created a substantial premium of approximately $1,500 between US copper prices and their London counterparts. Overnight trading saw modest profit-taking as traders reassessed positions following the strong rally.

The London Metal Exchange three-month copper contract closed at $9,880.00 on March 21, while cash settlement prices stood at $9,829.00.

Global Market Overview

US Market (COMEX): Copper futures maintained their strong premium over international markets, trading near $5.10/lb this morning as domestic consumers continue stockpiling amid tariff concerns. The May copper contract, the most actively traded, has established a strong uptrend since early March.

London (LME): The copper cash-settlement price stands at $9,813.48, reflecting continuing pressure from the divergence with US markets. LME stocks decreased to 221,775 tonnes as of March 24, down from 224,600 tonnes on March 21.

Asian Markets: Chinese copper demand remains robust despite property sector challenges, supported by the government’s recent stimulus measures. Copper prices in Shanghai followed global trends with a positive bias.

India: The copper price reached ₹905/KG as of March 24, showing an incline of 0.73% from the previous day.

Key Market Drivers

Trump Tariff Threats

The dominant market narrative continues to be President Trump’s potential 25% tariff on copper imports. Markets began pricing in this possibility after Trump’s administration launched an investigation into copper imports in late February.

During an address to Congress, Trump stated: “I have also imposed a 25% tariff on foreign aluminum, copper and steel. Tariffs are about making America rich again”.

This has prompted significant inventory movement, with Mercuria estimating that approximately 500,000 tonnes of copper are currently en route to the US, compared to normal monthly imports of about 70,000 tonnes.

Chinese Economic Stimulus

China’s recent economic initiatives have provided additional support for copper prices. Chinese authorities unveiled a special action plan aimed at boosting consumer spending by increasing incomes. Retail sales in China increased by 4% in the first two months of 2025, exceeding forecasts and helping offset potential export challenges from US tariffs.

Supply Constraints

The global copper market is facing significant supply challenges. Kostas Bintas, head of metals trading at Mercuria, predicted that copper demand this year will outstrip supply by 320,000 tonnes. Recent production issues include:

• Codelco’s warning that production this quarter will be similar to or slightly below year-ago levels due to maintenance work at El Teniente
• Chilean output declining by 24% month-over-month in January to a nine-month low
• Years of underinvestment in mining and refining capacity

Currency Factors

A generally weaker US dollar in 2025 has provided additional support for commodity prices, including copper.

Technical Analysis

The May Copper futures have shown strong bullish momentum after a double top breakout to the upside. The rally paused late last week, creating back-to-back DOJI candles on daily charts. Technical indicators suggest the next Fibonacci Extension target is at $5.1565.

The RSI remains in overbought territory at 72.47, though analysts note that this condition can persist for extended periods during strong bull markets.

Expert Opinions

Kostas Bintas of Mercuria emphasized the exceptional nature of current market conditions: “We think there is something exceptional happening in the copper market. Is it unreasonable to expect a copper price of $12,000 or $13,000? I’m struggling to put a number on it because this has never happened before”.

Kyle Rodda, senior market analyst at Capital.com, highlighted multiple factors driving the rally: “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”.

Major financial institutions remain bullish, with Citigroup expecting LME copper to hit $10,000 per tonne in the next three months, while Morgan Stanley anticipates further gains amid expectations of potential US tariffs.

Market Outlook

With supply tightness expected to continue and demand bolstered by both China’s stimulus and US stockpiling ahead of potential tariffs, copper prices appear positioned to remain elevated in the near term.

However, market participants should remain vigilant for policy shifts, particularly any formal announcements regarding US tariffs, which could introduce significant volatility.

As electrification needs continue to grow globally and grid developments accelerate, the structural case for copper remains strong despite current elevated price levels.

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