While recent metals commentary has focused on volatility in precious metals, copper has also experienced notable price swings. At the end of January, LME copper traded above USD 14,200/MT before retreating sharply to below USD 12,800/MT just days later. Prices have since firmed, supported largely by renewed US dollar weakness. Looking ahead, ongoing supply challenges and uncertainty surrounding the US tariff review may continue to underpin prices, although signs of cooling demand in China present a counterbalance.
US import tariff uncertainty remains a key driver for copper markets, with the review expected to conclude by the end of June. In anticipation of potential tariffs, significant volumes of copper have been drawn into the US, a dynamic that has so far proven supportive for prices. Given lingering supply concerns and the possibility of market deficits, it appears unlikely that US policymakers would want to reverse these inflows. As such, some form of tariff implementation would seem a benefit to the US. In the run-up to the decision, further precautionary buying could leave copper prices vulnerable to additional spikes.
Adding to the policy backdrop, President Trump has announced “Project Vault,” a strategic critical-minerals stockpile aimed at securing supply for US manufacturers and industry. Copper is included among a broad range of targeted minerals, reinforcing its strategic importance and providing longer-term structural support to the market.
Chinese buying behaviour has become increasingly price-sensitive in recent months, with buyers stepping back during rallies and re-entering on dips. Given China’s position as the world’s largest copper consumer, this raises questions over how sustainable current price levels are in the absence of stronger underlying demand. With the Chinese New Year approaching, early indications suggest an extended holiday period, which may further dampen near-term demand.
Finally, the forward curve has shifted back into slight contango, with near-dated futures trading below longer-dated contracts. This contrasts with the mild backwardation seen last month and points to some easing in immediate demand conditions.
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