Since early 2025, the US has maintained a complex tariff regime against Chinese imports, with an average effective tariff rate exceeding 50 percent on many goods, including metals.
These layered tariffs, comprising Section 301, Section 232, fentanyl-related duties, and reciprocal tariffs, have significantly raised costs for Chinese exporters.
Specifically, steel- and aluminum-related tariffs have extended to household appliances containing these metals, effective June 23, 2025. The anticipation of a 25 percent tariff on copper imports has prompted preemptive buying and stockpiling in the US, intensifying market distortions.
Chinese Smelters’ Export Surge and Its Impact on Global Copper Prices
In response to these tariffs and domestic pressures, Chinese copper smelters such as Jiangxi Copper and Tongling Nonferrous Metals Group have ramped up exports, aiming to deliver tens of thousands of tonnes of copper to London Metal Exchange (LME) warehouses in Asia.
This surge has flooded the LME market, narrowing the premium previously enjoyed by US copper contracts and compressing price differentials between COMEX and LME.
The recent $0 treatment charge deal between Chinese smelters and Chile’s Antofagasta miner further incentivizes Chinese refiners to increase output despite thin margins.
Did you know?
Copper has long been considered a leading economic indicator, often called “Dr. Copper” for its ability to predict global economic trends due to its widespread industrial use.
Divergence Between Comex and LME Prices Reflects Regional Market Fragmentation
Copper prices on COMEX dropped over 1 percent to around $11,120 per ton, while LME benchmark prices remained higher at nearly $9,887 per ton, illustrating a significant regional price gap.
Tariff-induced market segmentation, where US buyers face higher costs and Chinese exporters use government support to undercut Western competitors, is the driving force behind this divergence.
The rapid depletion of LME inventories, now less than a day’s global usage, has also contributed to backwardation and price volatility.
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The Role of Government Policies in Shaping Copper Market Dynamics
Chinese government initiatives to reduce electricity costs and other inputs for energy-intensive industries have enabled local smelters to operate more competitively on the global stage.
Conversely, US tariffs aim to protect domestic industries but have inadvertently encouraged stockpiling and market imbalances.
The recent agreement on US-China trade maintains high tariff levels, with the US imposing an effective 55 percent rate on Chinese goods, including metals, sustaining pressure on trade flows.
Outlook for Copper Prices Amid Ongoing Trade Disputes and Market Adjustments
Investment banks like Goldman Sachs forecast a temporary peak in LME copper prices around $10,050 per ton by August 2025, followed by a decline below $10,000 once US tariffs take full effect in September.
The global copper market faces a paradox of regional shortages outside the US amid a surplus overall, driven by tariff barriers and export surges.
Market participants must navigate this volatility carefully as geopolitical factors continue to reshape supply chains and pricing structures.
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