By Jamie Hyland
Copper has surged past the $10,000 per tonne threshold on the London Metal Exchange (LME), reaching $9,995/t before briefly breaking higher. This rally comes as traders and producers brace for the anticipated US Section 232 announcement later this year, fuelling bullish sentiment across global copper markets. The Section 232 investigation, first advanced under President Donald Trump’s administration and widely expected to be revisited or expanded if Trump returns to office, could impose tariffs or restrictions on copper imports, including a possible ban on copper scrap exports to China. These protectionist measures would likely support US copper producers while tightening global supplies, adding a geopolitical risk premium that has pushed copper prices higher.
For companies with significant copper exposure, such as Giant Mining Corp. (CSE: BFG | OTC: BFGFF | FWB: YW5), Freeport-McMoRan (NYSE: FCX), and First Quantum Minerals (TSX: FM), these price swings are critical. A sustained copper rally could strengthen project economics and drive investor interest, while a retreat on disappointing demand data could pose headwinds. As the Section 232 decision approaches, copper investors would be wise to watch policy developments as closely as price charts.
Rumours of large short positions by Chinese smelters and traders are also stirring up market anxiety. Reports suggest that if these smelters cannot deliver sufficient metal into the market, a significant price spike could follow. Traders have pointed to possible deliveries of 30,000–50,000 tonnes into LME warehouses in Hong Kong and other Asian locations to help cover short positions, though these flows remain speculative.
At the same time, higher copper prices on COMEX are lending support to the rally. COMEX copper is currently trading at $5.18 per pound, reflecting a $1,400/t premium over LME contracts. The higher US pricing is drawing copper cathode into the US, boosting CME inventories while depleting LME stocks. This shift has pushed LME futures into backwardation, adding technical support to copper’s run.
However, the physical market does show some mixed signals. Traders report that producers are offering copper for July delivery, while consumer buying has dipped slightly at current price levels, with more interest building for October shipment windows. This suggests end-users may be waiting for clarity on both pricing and trade policy before committing to larger volumes.
There are also questions about Chinese demand, as utilisation rates at Chinese primary copper rod producers fell by 1.8% to 74% last week. Wire makers’ utilisation rates declined even more sharply, down 3% to 70%. These figures indicate a softening of demand, though it may simply reflect seasonal slowdowns tied to factory maintenance and summer holidays.
The copper market remains delicately balanced between bullish drivers — tight stocks, potential policy shifts, and speculative covering of short positions — and bearish concerns about a slowdown in Chinese demand. Until clarity emerges from the US on tariffs and scrap export policy, volatility is likely to stay elevated.
