Copper demand likely to be subdued due to US-China trade war
On Monday, the three-month copper contract on the London Metal Exchange (LME) was quoted at $9,238 a tonne after rising to $9,271.5
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The demand for copper will likely be subdued because of the ongoing trade war between the US and China and the woes of the Chinese property sector, said analysts.
This will affect any bullish prospects for the red metal, though it is currently rebounding from a sharp fall witnessed at the beginning of this month.
On Monday, the three-month copper contract on the London Metal Exchange (LME) was quoted at $9,238 a tonne after rising to $9,271.5. Copper has gained nearly 15 per cent since the beginning of 2025, though it has pared 7.5 per cent month-on-month.
Dragged by concerns
“We are revising downwards our 2025 average annual copper price forecast to $9,500/tonne from $10,000, with our outlook leaning towards a bearish stance in the coming months as the Chinese property sector remains in the doldrums, trade uncertainty persists and the US-China trade war intensifies, threatening demand and constraining any potential price rebound,” said research agency BMI, a unit of Fitch Solutions.ṣ
Copper prices have averaged $9,385/tonne in the year-to-date as of April 9. They have been dragged down by concerns about slower global growth, including in China, following the escalation in tit-for-tat tariffs between Washington and Beijing.
“Copper prices have risen 11 per cent since the start of 2025, driven by strong Chinese and US demand. Prices are expected to average $9,570 a tonne in 2025 and rise to$9,870 a tonne by 2030 in real terms,” said Australia’s Office of the Chief Economist (AOCE).
Uncertainty aplenty
ING Think, the economic and financial analysis wing of Dutch multinational financial services firm ING, said, “Clearly, though, there’s still plenty of uncertainty as tariffs against key metal consumers, China, have been raised to 125 per cent. A prolonged trade war would drag on consumer confidence, weaken risk appetite and weigh on demand for raw materials.”
Copper prices started the year on a strong note, hitting $10,112 on March 25 after being marked as Trump’s next target for tariffs in late February. It sparked a US copper rush. However, prices are under pressure due to a looming downturn in demand owing to growth deceleration in major markets, said BMI.
However, ING Think said the prospect of a prolonged trade war has also raised expectations for Beijing to unveil more aggressive stimulus measures. This could cap the downside to copper and other industrial metals.
The three-month pause in Trump’s tariffs has sparked a relief rally to some extent, but full recovery is far off, said BMI.
Not recouping fully
“The move (3-month pause) eased immediate trade tensions and supported risk assets globally…, investors are keeping a close eye on upcoming trade talks between the US and key partners this week, including Japan, India, and South Korea,” said the Trading Economics website.
However, BMI said despite Trump’s tariff pause announcement (except for China), copper was unable to fully recoup losses, and the ongoing economic uncertainty is expected to keep the market on edge, challenging the demand outlook.
Copper prices have gained from expectations that the US may still impose metal-specific tariffs on national security grounds. This has widened the premium of US copper futures over comparable London Metal Exchange contracts, as potential trade barriers threaten to strain America’s already limited copper smelting capacity, Trading Economics said.
The AOCE said copper prices are expected to rise due to high demand for low-emission technologies, rising data centres, and ongoing urbanisation. A tight concentrate market will support price gains, it said.
Price assumption
BMI said a further reduction in trade policy uncertainty, if various countries manage to strike deals with the US, should mitigate downside pressure on global growth, and in turn place a floor under copper prices. “Even then, challenges to the demand outlook will remain as Chinese GDP growth slows to 4 per cent in 2025. That said, Beijing’s potential response with a massive stimulus to support the economy could offset some of the losses,” it said.
The research agency said its price forecast for copper assumes that prices will remain supported in the second half of the year, once the US Fed starts to cut rates, resulting in a weaker dollar, which would allow copper to hold up going into 2026.
Published on April 14, 2025
