Tariffs Fuel Copper Tightness, But Policy Shifts May Bring Sharp Correction

Copper markets are facing a period of tariff-driven tightness, but policy shifts could quickly alter the balance, according to a recent analysis by ING.

The tightness in the copper market is largely attributed to tariffs imposed on copper imports, which have constrained supply and pushed up prices. As of early 2025, the U.S. has considered Section 232 tariffs on copper, which have created uncertainty and prompted stockpiling behavior. This has led to a squeeze in available supplies, particularly in the U.S., where premiums have spiked.

However, ING warns that policy risk is a double-edged sword. While tariffs may support prices in the short term, any easing or removal of these tariffs could lead to a sharp correction. Additionally, global demand remains a key variable, with China's economic slowdown and the green energy transition affecting copper consumption. The market is also watching for potential supply disruptions in major producing countries like Chile and Peru.

Investors should monitor policy announcements from the U.S. administration, as well as inventory levels in LME and COMEX warehouses. A sudden change in tariff policy could trigger significant price movements. For the industry, the tightness presents both opportunities and risks, with some sectors benefiting from higher prices while others face increased input costs.