Copper Is 2025’s Hottest Commodity
Suppliers and domestic manufacturers are rushing to move copper into the U.S. ahead of potential import taxes
Copper prices in the U.S. have surged ahead of those in the rest of world and hit a record last week, a sign the mere threat of tariffs is lifting costs for domestic manufacturers.
Benchmark U.S. copper futures ended Friday at $5.1125 a pound, up 28% this year. That compares with a 13% gain to $9,795 a metric ton—or about $4.44 a pound—on the London Metal Exchange, which is the global trading hub.
It is an unprecedented gap in prices that have otherwise moved for decades in near lockstep.
Copper suppliers and domestic manufacturers that consume it are rushing to move the metal into the U.S. ahead of import taxes that have been threatened by President Trump.
Copper is used in manufacturing everything from automobiles to mobile phones and in construction, where it is used to convey electricity and water in wires and pipes. Consumption surged in recent decades as China modernized and has lately gotten a boost from the growth in renewable energy production and the boom in data-center construction.
U.S. copper futures have been the top performer among major commodities in the first quarter. Prices for the industrial metal last week topped the record set in May but have since pulled back. Copper’s gains have outpaced the 24% rise in lumber futures, which was also fueled by uncertainty over tariffs.
The price gap in the copper market has opened a lucrative window for traders to buy abroad and deliver to panicked U.S. buyers.
The cancellation rate of warrants on the LME, which signifies buyers’ intent to take physical delivery of their copper stored in the exchange’s warehouses, has lately been about five times what it was over the prior year, according to Morgan Stanley analysts.
Meanwhile, Chinese smelting costs have plunged—and even occasionally turned negative. That means copper processing facilities there are having such a hard time finding raw copper that they are willing to lose money to get enough material to keep running, said Steve Schoffstall, director of ETF product management at Sprott Asset Management.
Those are signs that a flood of copper is flowing out of warehouses around the world and headed stateside.
A similar trans-Atlantic trend has played out recently in the gold market, which is also bracing for tariffs. And the market dynamics have shades of Europe’s scramble for cargoes of liquefied natural gas following Russia’s 2022 invasion of Ukraine, which had tankers making U-turns midocean.
“Copper that might have been destined for other parts of the world is now being rerouted to the U.S. to take advantage and arbitrage that premium,” said Schoffstall, whose firm runs funds that buy and hold copper and invest in mining companies.
Earlier this month, Trump invoked the Defense Production Act with an executive order aimed at boosting the domestic output of minerals, including copper.
In February, he ordered the Commerce Department to open an investigation under Section 232 of the Trade Expansion Act, which covers national security threats, and examine copper imports. He has also signed an order advancing a 211-mile private industrial road into Alaskan mining country.
Beyond that, Trump has mentioned copper as a target of tariffs, without offering many details. He imposed a 25% levy on aluminum and steel and has threatened broad 25% tariffs on imports from Canada and Mexico, both big suppliers to the U.S.
“Investors aren’t waiting around to find out what the tax could be,” said Adam Turnquist, chief technical strategist for LPL Financial.
Glencore, one of the world’s largest copper producers, estimates the global copper supply must grow by about one million metric tons a year through 2050 to meet rising demand. That would require annually adding production equivalent to the world’s largest copper mine, Chile’s Escondida. Even if such rich deposits are found, it can take decades for mines to move from discovery to production—nearly three, on average, in the U.S.
The expected imbalance between supply and demand has analysts and traders optimistic about the long-term prospects for copper prices.
Economic stimulus in China and better-than-expected economic data in Europe bode well for near-term copper demand. Yet analysts say that since the recent price jump reflects demand being pulled forward, prices are likely to decline later this year regardless of whether Trump implements tariffs.
“In fact, if U.S. tariff policy starts to have an increasingly negative impact on the U.S. economy, demand concerns could put additional pressure on prices,” Commerzbank analyst Thu Lan Nguyen wrote in a note to clients.