Quarterly Outlook
Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?
John J. Hardy
Global Head of Macro Strategy
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Tariffs and the energy transition: Key short- and long-term drivers of copper demand
Ole Hansen
Head of Commodity Strategy
Key points in this update:
- Copper, a key industrial metal that has yet to be included in Trump's widening catalogue of tariff-hit products, continues to rally on the assumption that it is just a matter of time
- Developments that will underpin prices in the short term before a more long-term structural support emerges, driven by the energy transition—one of our commodity-supportive mega trends
- The US HG copper price is currently trading at a 44.5 cents/lb or 9% premium over the global benchmark price at the London Metal Exchange
- The major stockpile shifts to the US will leave copper stranded in the US while leading to a sooner-than-expected tightening of the global market.
Copper, a key industrial metal that has yet to be included in Trump's widening catalogue of tariff-hit products, continues to rally on the assumption that it is just a matter of time—a belief that has uprooted normal supply and demand dynamics. While Trump's worldwide 25% tariffs on steel and aluminium imports took effect overnight, the copper market is still awaiting the result of an investigation carried out under Section 232 of the Trade Expansion Act. As such an investigation normally takes months to be completed, it has left the door wide open for a massive profitable arbitrage between international prices and those in the US being reflected through the High Grade futures contract in New York.
The May 2025 US copper price (HGK5) is currently trading at a 44.5 cents/lb (USD 877/ton) premium over the global benchmark price at the London Metal Exchange. This near 9% premium will rise to 25% if that is the tariff being implemented following the result of the S232 copper investigation. However, given expectations that such an investigation will take time to complete, we are seeing several price-supportive developments that underpin prices in the short term before a more long-term structural support emerges, driven by the energy transition—one of our commodity-supportive mega trends—that will lead to surging demand for power, particularly towards electric vehicles (EVs), data centres, and cooling, as temperatures rise across the world.
Put simply, the current price spike isn’t due to consumer demand but rather major stockpile shifts to the US, and while it creates a windfall for traders who are able to source and ship copper to the US, these flows, most of which will then be left stranded in the US until consumed, will exacerbate an already tight global market into the second half of 2025. By Q3 2025, Goldman Sachs estimates 45-60% of global reported copper inventories could be in the US, which accounts for just 6% of global refined demand—leaving the rest of the world with very low stocks of this important transition metal.
These factors are the main reasons why the HG copper future trades up 21% year to date while London has ‘only’ managed a 12% increase so far, and it highlights how tariffs continue to uproot normal market behaviour, similar to what we saw earlier this year in the silver and gold markets, and how these forces can mute the focus on a global economic slowdown and its potential negative impact on demand.
So far today, the HG futures contract in New York trades up 2% at USD 4.8650 while in London the LME copper contract has added 1.2% to trade around USD 9,780 per ton, or USD 4.436 per pound.
Recent commodity articles:
11 Mch 2025: Gold holds steady despite deleveraging risks in volatile markets
10 Mch 2025: COT Report: Wholesale reductions in speculators' USD and commodity longs
7 Mch 2025: Commodities Weekly: Tariffs, trade tensions, fiscal bazooka, and Ukraine
5 Mch 2025: Tariff threat disconnects HG copper from global market
4 Mch 2025: Stagflation and geopolitical tensions fuel renewed demand for gold
3 Mch 2025: COT Report: Broad retreat sees WTI longs slump to 15-year low
28 Feb 2025: Commodities weekly: Broad weakness as tariff fatigue sets in
24 Feb 2025: COT Report: traders turn selective despite ongoing broad rally
21 Feb 2025: Commodities weekly: energy market strength and Trump rethoric fuel surge
18 Feb 2025: COT report: crude, gold and grains see mild profit taking
5 Feb 2025: Broad Strength Drives Commodities sector to 26-month High
4 Feb 2025: Crude Oil Wipes Out 2025 Gains as Tariffs and Demand Weighs
3 Feb 2025: COT Report: Mixed Week Seen Ahead of Trump's Tariff Offensive
1 Feb 2025: YouTube: Joining Kevin Muir on The Market Huddle podcast
31 Jan 2025: Commodities weekly: Strong January led by precious metals
29 Jan 2025: Agriculture sector rally led by coffee, corn and cattle
27 Jan 2025: COT Report: Commodity buying extends to fourth week
24 Jan 2025: Commodities weekly: Trump tariff threats and energy agenda in focus
23 Jan 2025: Crude oil weakens amid tariff uncertainty
22 Jan 2025: Gold and silver see fresh gains as Trump 2.0 era begins
20 Jan 2025: COT Report: Elevated commodities longs face short-term risks
17 Jan 2025: Commodities weekly: Strong January rally pauses ahead of Trump
15 Jan 2025: Q1 2025 Commodity outlook: A bumpy road ahead calls for diversification
14 Jan 2025: COT Report: Hedge fund long jumps to 17-month high led by crude, gas and metals
13 Jan 2025: Crude oil rally amid winter demand and Russian sanctions
10 Jan 2025: Commodities weekly: Strong start to the year led by energy and metals
7 Jan 2025: COT Report: Managed money's year-end positioning in forex and commodities
Podcasts that include commodities focus:
10 Mch 2025: US un-exceptionalism is the theme
7 Mch 2025: US bear market risks ratchet higher. EUR train has left the station
4 March 2025: Are we on the verge of a big whoosh?
25 Feb 2025: Meltdown risks are rising. What to watch next
18 Feb 2025: Europe is on fire
5 Feb 2025: Mag 7 risks underappreciated?
3 Feb 2025: If new Trump tariffs stick, markets have only just begun to react
31 Jan 2025: Does the market think Trump is bluffing?
29 Jan 2025: The DeepSeek winners emerge
27 Jan 2025: DeepSeeking missile strikes global markets
24 Jan 2025: Four days in, Trump continues to dominate headlines, but ...
20 Jan 2025: Trump 2.0 swings into action
17 Jan 2025: Brace for Monday, as a new era begins
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