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Informist, Tuesday, Mar. 25, 2025

MUMBAI – Copper prices are rallying as market participants expect the new US tariffs to hit the metal, prompting companies to stock up their inventories to avoid shortages, analysts at Commerzbank said in a research report. However, there may be a price correction, at least temporarily, as soon as the pull-forward effect on US demand comes to an end, they said.

"This in turn could prompt US companies to bring forward their demand and build up their inventories in order to avoid material shortages and thus ensure a surge in demand, at least in the short term. These are fears that are currently driving the copper price higher," Thu Lan Nguyen, head of commodity research at Commerzbank, said in the report.

US President Donald Trump last month ordered the US Commerce Department to investigate the threat that copper imports pose to national security and suggest ways to mitigate any such threat. The mitigation efforts include "potential tariffs, export controls, or incentives to increase domestic production," the order said.

Further, Trump said on Monday he might soften the reciprocal tariffs he plans to impose on US trading partners next month, and that some nations might get exemptions. "This was greeted with relief by market participants after increasing fears that US tariff policy could lead to a global trade war, with correspondingly negative consequences for the global economy," Nguyen said.

Moreover, the global refined copper market was in a deficit of 19,000 tonnes in January, according to the International Copper Study Group. "Further support (to copper prices) comes from the latest data from the International Copper Study Group, which also show a (slight) seasonally adjusted supply deficit in the copper market for January," Barbara Lambrecht, commodity analyst at Commerzbank, said in the report. "On the other hand, the doubling of the import premium for copper in the port city of Yangshan indicates that demand is strong not only in the US but also in China."

However, production of the red metal in China remains high. Chinese copper production during the first two months of 2025 was up 3.7% on year. "The scarcity of copper ore does not (yet) appear to be a brake on production," Lambrecht.   End

Reported by Ashutosh Pati

Edited by Tanima Banerjee

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