Copper futures in the United States were trading below $4.65 per pound on Wednesday, holding onto most of last week’s losses amid mounting signs of weakening global demand and a substantial buildup of inventories in North American warehouses.
Copper holds recent losses
The downturn in copper prices reflects growing investor caution, fueled by a series of disappointing manufacturing PMI readings from major economies. Factory activity in China, the United States, and Europe all showed signs of contraction, underscoring sluggish industrial demand and reducing optimism for a near-term rebound in base metal consumption.
At the same time, supply-side pressures have intensified. Robust ore output from South American producers, particularly Chile and Peru, has added to global supply, further tilting the market into surplus. The International Copper Study Group (ICSG) recently doubled its forecast for the 2025 copper surplus, now estimating an excess of nearly 300,000 tonnes, citing increased mine production and slower-than-expected demand recovery.
Shift in speculative positioning
This deteriorating balance between supply and demand has prompted a shift in speculative positioning. Chinese traders, once bullish on US copper futures following President Trump's announcement of a probe into potential tariffs on copper imports, have now begun closing long positions. The initial surge in long interest had been driven by expectations that tariff threats would restrict imports and tighten domestic supply. However, instead of disrupting flows, the tariff uncertainty triggered a sharp reversal, as exporters rushed to redirect shipments into the US before any levies were imposed.
Consequently, US copper inventories have risen sharply, with large volumes of refined copper flooding into domestic warehouses. This stockpiling effort, aimed at shielding industrial users from potential future tariffs, has only deepened fears of a near-term oversupply. The combination of weak global demand, growing stockpiles, and fading speculative support continues to weigh heavily on copper prices, clouding the outlook for the second half of the year.
