Due to US President Donald Trump’s push to impose tariffs, international copper prices hit new highs again on Thursday.
Copper futures on the New York Commodity Exchange (COMEX) surged past the $11,000-per-ton mark, reaching $11,270 during intraday trading. Meanwhile, on the same day, copper futures on the London Metal Exchange (LME) crossed the $10,000-per-ton threshold, but the price premium of COMEX copper expanded further, nearing 13%.
Craig McMillan, Chief Financial Officer of HorizonCopper Corp. (TSXV: HCU), revealed the development timeline of the Oyu Tolgoi project during an interview on METALS 100 and shared his views on the copper market. Horizon Copper holds a high-quality portfolio of copper assets, including a 30% interest in the Hod Maden copper-gold project, an indirect interest in the Oyu Tolgoi copper mine through a 25% equity ownership in Entrée Resources Ltd., and a 1.66% net profits interest in the Antamina copper mine.
Last month, the Trump administration announced a “Section 232 investigation” into copper imports, widely seen as a precursor to imposing tariffs. Although the results of the copper tariff investigation are expected to be announced by the end of the year, both Goldman Sachs and Citigroup predict that the US will impose a 25% tariff on copper imports by year’s end.
Following this announcement, the domestic price of copper in the US soared as traders rushed to ship copper to the US in advance to avoid potential tariffs, leading to tighter supplies in other parts of the world.
However, even with tariffs, US copper buyers have no alternative but to continue importing, as the country consumes twice as much copper as it produces. Chile is the largest supplier of copper to the US, accounting for 41% of imports, followed by Canada at 27%.
Data show that COMEX copper prices have risen 27% year-to-date, compared to a 14% increase on the LME. The price gap has incentivized redirection of over 100,000 tons of copper to the US. According to Bloomberg, major commodity firms like Trafigura and Glencore are reallocating supplies from Asia.
A trading director at Zijin Mining Investment (Shanghai) Co., Ltd., stated that this is a cross-regional price restructuring triggered by potential US tariffs. Cargoes are being drawn to the US, creating shortages in other regions, and market sentiment is strongly bullish.
Apart from the supply-demand mismatch caused by the high premiums on COMEX copper, the persistent raw material shortages that have plagued the copper market in recent years are unlikely to be resolved in the short term.
While mining giants like BHP and Rio Tinto plan to increase production, the market’s anxiety will remain difficult to alleviate in the near term. Additionally, due to reduced copper mining investment and declining ore grades in previous years, copper concentrate processing fees have steadily declined since the fourth quarter of 2023. Copper smelters may even consider unplanned production cuts or shutdowns.
