Copper gains on supply disruption

Copper futures edged up to around $4.43 per pound on Tuesday, lifted by fresh supply-side concerns following a tunnel collapse at Chile’s El Teniente mine — one of the world’s largest underground copper operations.

The incident prompted a suspension of mining activities, raising alarms across global markets already grappling with tight concentrate supply. El Teniente alone accounts for roughly a month’s worth of copper ore supply for Chinese smelters, underscoring the potential for short-term disruptions in refined output and amplifying anxieties over sourcing stability in a finely balanced market.

The setback comes at a time when the copper concentrate market is already constrained by logistical bottlenecks, lower-than-expected mine output in key producing regions, and slower permitting processes for new projects.

With China accounting for over 50% of global copper consumption — largely driven by its power grid investments, renewable energy buildout, and EV production — any shock to feedstock availability tends to reverberate swiftly through the pricing chain. Traders are now recalibrating expectations for smelter operating rates in Q3, particularly as treatment and refining charges (TC/RCs) remain under pressure.

Despite this bullish supply-side impulse, copper prices remain weighed down by broader bearish sentiment, hovering near four-month lows. A key factor continues to be the buildup of inventories in the United States, where copper stockpiles have surged in recent weeks. These gains were largely driven by frontloaded shipments ahead of expected trade policy changes, leading to temporarily elevated domestic premiums and a decoupling from global pricing trends.

Last week, copper markets experienced a sharp correction, with prices plunging more than 20% in the aftermath of a policy clarification from President Donald Trump. The administration confirmed that forthcoming tariffs would apply only to semi-finished copper products — such as wires, pipes, and tubes — while excluding raw material inputs like copper ore, cathodes, and concentrates.

These exemptions effectively shield the bulk of US copper imports from cost escalation, undermining previous assumptions that tariffs would tighten domestic supply. The announcement triggered a wave of long-liquidations among speculative traders who had bet on a broader protectionist push, contributing to the steep price drop.

Looking ahead, the copper market faces a tug-of-war between supply risks and demand-side skepticism. While production setbacks and mine disruptions may tighten physical availability, persistent concerns over global manufacturing softness, bloated inventories, and tepid policy responses — particularly in China — continue to cap upside momentum. As such, near-term price direction may hinge not only on operational updates from Chile but also on macro indicators and trade negotiations in both Washington and Beijing.