Copper futures in the U.S. held firm above the $4.30 per pound mark on Thursday, maintaining most of their recent rebound after hitting a three-month low earlier in the week. The rally came in the wake of U.S. President Donald Trump's unexpected decision to pause the implementation of his broader reciprocal tariff package for 90 days, a move that helped ease immediate fears of a recession and lifted sentiment across risk assets.
Copper holds most of rebound
Although the initial round of reciprocal tariffs excluded copper, the 10% levy on imports from non-retaliating nations was enough to calm markets and improve expectations for near-term manufacturing activity, particularly in the U.S., where the industrial sector is showing tentative signs of stabilization.
Still, despite the recent recovery, copper prices remain more than 20% below their all-time high of $5.30 per pound reached on March 26th, as investors remain wary of further disruptions. President Trump has publicly stated that additional, sector-specific tariffs — including those targeting copper — are likely in the coming weeks. The announcement has raised alarm within the U.S. manufacturing and construction industries, which depend heavily on both refined copper and copper-based components.
Potential tariffs begun to distort pricing dynamics
The potential introduction of direct tariffs on copper has already begun to distort pricing dynamics, widening the premium of U.S.-traded copper futures over comparable contracts on the London Metal Exchange (LME). This divergence reflects growing concern that the U.S.'s limited domestic smelting and refining capacity could struggle to meet demand if imports become more costly or restricted, leading to tightness in local physical markets.
Further compounding the supply risks is the escalating trade war between the U.S. and China. With Washington raising tariffs on Chinese imports to 125% and Beijing responding with 84% duties on American goods, bilateral trade flows — including those involving copper scrap — have come under renewed pressure. China remains the largest global importer of copper scrap, much of which traditionally comes from the U.S. The heightened trade barriers are likely to reduce scrap shipments, further tightening availability of secondary copper in China and potentially increasing competition for refined metal across Asia and beyond.
Meanwhile, underlying copper demand fundamentals remain mixed. While global electrification, energy transition projects, and EV infrastructure continue to support long-term copper consumption, the near-term outlook is clouded by weaker construction activity in key markets like China and a slowdown in global manufacturing PMI figures. Investors are now closely watching for further policy signals from both Washington and Beijing, as well as inventory trends in major exchange warehouses, to gauge the next move in copper prices.
