Copper prices are being pushed skyward as China’s stockpiles sit on the verge of depletion and as US demand for the red metal surges, fueled by looming trade restrictions under the Trump administration.
According to Mercuria, the market is undergoing “one of the greatest tightening shocks” in its history.
“At the current pace of draws, those Chinese inventories could deplete (to zero) by the middle of June,” Nicholas Snowdon, head of metals and mining research at the commodities trading house, told the Financial Times.
“Beijing had a razor-thin inventory buffer” to meet its soaring domestic demand, he added.
Copper inventories held in Chinese warehouses fell by a record 55,000 metric tons last week alone, sinking to just 116,800 metric tons. The sudden drawdown has placed further stress on a market that is already being strained by geopolitical tensions and a shift in long-term demand driven by clean energy initiatives and electrification.
The copper squeeze is being exacerbated by US buyers rushing to secure supply ahead of potential new tariffs.
US President Donald Trump has signaled that his administration is investigating “dumping and state-sponsored overproduction” of copper, echoing the rationale used for the imposition of 25 percent levies on steel and aluminum.
Copper futures prices on the Comex in New York have soared, rising 16.35 percent year-to-date to trade for US$4.69 per pound. The rally has been further buoyed by signs that China’s Ministry of Commerce is open to trade talks with the US — it has reportedly “taken note” of Washington’s signals and is evaluating the possibility of engagement.
As a result, inventories in Comex warehouses have surged to their highest levels since 2018.
The copper crunch is not confined to refined metal.
Analysts warn that Chinese access to copper scrap — a vital feedstock for its smelting industry — is also under threat from retaliatory trade measures and possible US export controls.
China relies heavily on imported scrap, and the US remains a key supplier. In 2024, the US exported 960,000 metric tons of copper scrap, nearly half of which went to China, according to data from Fastmarkets.
This year, exports are already trending lower: 142,000 metric tons were shipped in January and February, down from 149,000 metric tons in the same period last year. If the US imposes a ban on scrap exports or China imposes retaliatory import duties, the shortage in Asia’s largest economy could become even more acute.
Copper’s strategic role in the energy transition
Beyond short-term trade politics, copper is at the heart of a deeper structural transformation.
As the global economy pivots toward electrification and decarbonization, demand for the base metal is set to soar — despite advances in material efficiency and substitution.
During a recent webinar, Michael J. Finch, head of strategic initiatives at commodities price and data firm Benchmark Mineral Intelligence, noted that the accelerating deployment of electric vehicles (EVs), EV charging infrastructure and renewable energy sources is rapidly driving up copper intensity across energy systems.
“What … we can’t forget is, what are the requirements on the grid network? What are the requirements on power generation because of EVs, because of the charging infrastructure?” Finch said. He emphasized to attendees that while copper usage per EV has declined from around 100 kilograms in 2015 to about 68 to 70 kilograms today due to design optimizations and thrifting, total copper demand from the EV sector is still expected to rise sharply.
“We’re still looking at a market here … (of) over 5 million tonnes by 2040,” he said.
“That’s going to need a lot of charging infrastructure. That’s going to need a lot of grid upgrades. That’s going to need a lot of renewable power to be put in place,’ Finch added.
The overlapping dynamics of geopolitical uncertainty, rising protectionism and shifting energy priorities have created a volatile cocktail that could reshape global copper trade flows.
Efforts are underway in the US to take advantage of this shift. European copper producer Aurubis is investing 740 million euros in a new recycling facility in Richmond, Georgia, aimed at bolstering domestic supply. The plant, which is expected to be operational by the end of the fiscal year, will rely primarily on scrap sourced within the US.
Meanwhile, analysts are watching closely to see if the US and China can defuse trade tensions before they further destabilize a market that is already stretched thin.
Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.