U.S. copper prices have reached unprecedented levels, significantly surpassing increases observed globally, due to worries about possible import duties boosting internal expenses. Last Friday, American benchmark copper futures concluded trading at $5.11 per pound—a rise of 28% for the year—contrasting sharply with an uptick of merely 13% on the London Metal Exchange.
The increasing disparity highlights a rush by producers and suppliers to accumulate copper ahead of potential trade limitations, according to a report from The Wall Street Journal published on Sunday. President Trump has suggested imposing tariffs on copper and has recently utilized the Defense Production Act to enhance domestic mineral production.
From construction sites to electronic devices, copper usage has seen an upsurge due to the rise of clean energy solutions and the proliferation of data centers. However, constrained worldwide production alongside changing international trading conditions are causing disruptions in the market. The rate of cancellations for copper shipments from London Metal Exchange storage facilities has increased dramatically, and Chinese refineries are grappling with such significant raw materials scarcity that they're sustaining financial losses.
According to analysts, copper that was originally destined for other international markets is now being rerouted to the U.S. to take advantage of higher prices, as mentioned in the Journal report. Similar trends were observed when Europe sought alternative energy sources following Russia’s invasion of Ukraine.
Persistent long-term supply worries remain. Large mining companies like Glencore continue to be of concern. OTCPK:GLCNF ) ( OTCPK:GLNCY The world needs to increase its annual copper supply by 1 million metric tons by 2050—an ambitious goal considering the long periods required for new mining projects to commence operations.
While near-term demand remains strong, some analysts anticipate copper prices to decrease towards the end of this year, particularly if tariffs hinder the growth of the U.S. economy.
