Copper Prices Surge Amid U.S.-China Trade Tensions

NEW YORK (AP) — Copper prices have reached all-time highs due to ongoing trade tensions between the U.S. and its primary trading partners. This situation threatens to disrupt the supply of this essential metal.

In anticipation of possible tariffs, buyers in the U.S. have begun stockpiling copper. On a recent Tuesday, future prices soared to $5.21 per pound, representing an increase of around 30% since the beginning of the year, following modest growth in previous years.

President Donald Trump has indicated that he may impose tariffs of up to 25% on all copper imports while advocating for an increase in domestic copper production. Simultaneously, China, the largest importer of copper, is launching a stimulus initiative aimed at boosting its economy, likely resulting in heightened demand for copper.

“The threats of tariffs, the tightening of supply, and the optimism spurred by stimulus programs in China have contributed to a rally in copper prices,” stated Adam Turnquist, chief technical strategist for LPL Financial.

Copper plays a vital role in global energy infrastructure. It is crucial for electronic device cords, power transmission lines, batteries, and LED lighting. The transition towards cleaner energy technologies, such as solar power, has already increased copper demand, which is expected to rise further as artificial intelligence advances and places more demands on data centers and the energy grid.

“The current uses of copper in today’s economy are expanding, and the intensity of its utilization is on the rise,” said Kathleen L. Quirk, President and CEO of mining corporation Freeport-McMoRan, during a recent global metals conference.

The International Energy Agency anticipates that demand for copper will increase by 20% to 31,128 kilotons by 2030, growing by 41% to 36,379 kilotons by 2040. In 2024, the U.S. extracted approximately 1.1 million tons of copper, which is significantly less than top producers like Chile, Peru, and China.

Amid increasing demand, copper mining companies are seeing their stock values rise. Shares of Freeport-McMoRan have climbed 12% this year, while Southern Copper, which operates in Mexico and Peru, has gained 8%. This growth occurs even as the broader market has faced challenges, with the S&P 500 index declining by about 2%.

However, the surge in copper prices could have negative consequences for certain businesses and consumers.

The construction sector, especially home builders, may experience financial strain due to escalating copper costs, which could lead to higher construction expenses as demand continues to outstrip supplies. In 2024, the National Association of Homebuilders indicated that total construction costs for single-family homes rose by nearly 9.2% compared to the previous year. The increasing price of copper, along with other essential materials like lumber, could amplify inflation pressures in the construction industry.

Additionally, consumer goods such as appliances and electronics that use copper may see increased prices, further contributing to inflation and potentially leading consumers to reduce spending on these items.

copper, prices, trade