Commodity Import Trends

Let’s talk about copper imports and some of the complexity right now in anticipating overall effects on users (both in terms of timing and magnitude of effects). Two charts below (one my own, one reproduced from Bloomberg, originally from https://lnkd.in/g__Rvwet). Thoughts: •The top chart shows metric tons of imported copper cathodes & sections of cathodes (HTS 7403.11.0000), which is by far the largest imported type of manufactured copper product (HTS 74), with 2024 imports totaling $8.47 billion dollars (out of $17.2 billion in imports for all of HTS 74, or about 49.4%). In 2024, the average month saw ~75,000 tons of imports. April and May 2025 (last two data points) saw imports of 201,434 and 218,133 tons, respectively (or 2.7x and 2.9x prior year average monthly imports). This frontloading means there is a large stockpile of copper already in the USA that won’t be hit with tariffs. •However, before spiking the inflation football and saying “well, then there will be no inflation”, you need to look at the second chart. This shows the percent premium for US copper futures (Comex) relative to the London Metal Exchange. Normally, that premium is quite low. However, it exploded in 2025, reaching over 20% since 7/8 (when the 50% copper tariffs were announced). For reference, LME copper trades around $10,000 a ton today. What this means is that US users of copper have been paying a 5-15% premium for copper relative to firms in other countries over the past few months, which has now increased to above 20% (and this is before tariffs take effect). •Why does that price premium matter? Simple: higher copper prices in the USA reduce the competitiveness of US exports that contain copper. Moreover, it’s important to remember that far more people are employed in industries that use copper versus the entire copper mining, smelting, refining, and product industrial complex. Simple example: electrical equipment and component manufacturers (NAICS 335) employ 400,000 workers (https://lnkd.in/gEXCTusE), with electrical products extensively using copper. In contrast, the USGS reports just 13,000 workers in the entire copper industrial complex in the USA (https://lnkd.in/gU-pftdr). Implication: Copper tariffs are another example where we are tariffing an upstream intermediate input used by far more workers than employed in the industry that makes the upstream intermediate input. Such trade policies are net job killers, and have even been termed self-harming trade policy (https://lnkd.in/gWgxQjtY). #economics #markets #shipsandshipping #supplychain #construction #supplychainmanagement #manufacturing 

Everyone is watching gold and silver. But the metal quietly turning strategic for the world economy is copper.   I recently went through Nuvama’s Commodity Report on Copper, and few insights really stood out:   -Copper prices have touched record highs up ~35% this year. -Mine disruptions over the last two years have removed ~1.1 million tonnes of supply, nearly 5% of global output. -A large share of copper inventory has shifted into the US because of tariffs and security-led stockpiling. -Demand is rising sharply from AI data centres, EVs and power grids. -While there is a small surplus today, 2026 could move into a refined copper deficit.   To put simply… the world is moving toward a more electrified, AI-driven future and copper sits at the centre of that shift… while new supply is struggling to keep up. Which is why copper may increasingly be viewed as not just an industrial input, but also a strong long-term investment instrument.   And my personal takeaway? Copper could be the next gold.   (That is my personal view, not from report)

The global copper market is tightening – and recent tariff announcements have accelerated this trend. The copper price jumped the most in a single day on record (going back to 1969) after U.S. President Trump said that copper tariffs could jump to 50%.* In our view, governments see the importance of securing critical minerals supply. They are also aware that supply may struggle to keep up with demand over the next decade. Long-term demand is driven by infrastructure spending, electrification, materials-intensive renewable energy, AI data centres and surging power requirements. The International Energy Agency’s solar capacity additions forecast implies that this use alone will require around 22 million tonnes of copper between now and the end of the decade (total global copper demand in 2024 for all uses was around 27 million tonnes).** And in the near term, China’s copper demand has been extremely strong during the first five months of this year. See the chart. On the supply side, we have seen 650,000 tonnes of production downgraded this year which represents a 2.7% hit to global supply.*** This is largely due to severe flooding at the underground Kamoa Kakula mine in the Democratic Republic of the Congo, caused by seismic activity. These supply-demand issues mean that copper prices held up well in 2025 even before the recent jump, despite concerns that tariffs will be a drag on global economic growth. An interesting question is what happens in the second half of the year as some of the front-end loading of demand (as buyers seek to get ahead of tariffs) ends. We continue to believe that prices will need to keep moving higher in the longer term to support the development of new greenfield projects and offset ongoing inflation. Capital at risk *Financial Times, 9 July 2025 ** IEA, May 2025 ***Wood Mackenzie, May 2025

One of the copper market’s biggest-ever squeezes is unfolding on the London Metal Exchange as rapidly declining inventories push up spot prices. Spot copper traded at a $345-a-ton premium to three-month futures on Monday, hitting the highest level seen since a record spike in 2021. The huge spot premium — known as a backwardation — signals a supply shortage, and it comes after a rapid drawdown in LME inventories over the past few months. Stockpiles in the LME’s warehouses serve as a buffer for manufacturers during periods of strong demand, while holders of short positions can also use them to close out their contracts. Backwardations typically indicate that the volume of stock in exchange warehouses is insufficient to meet their needs. Readily available inventories on the LME have declined about 80% this year, and now equate to less than a day of global usage. The depletion has been fueled by a global race to move copper to the US ahead of potential import levies, in a dynamic that’s left buyers elsewhere increasingly short of metal. Mark Burton #copper #lme #commoditytrading

Everyone’s finally saying the quiet part out loud: ✨ We’re at the beginning of a copper supercycle.  Now the part that isn’t being said: This *is not* just about AI and data centers. Copper is a socioeconomic material. Nearly 70% of global copper demand already goes to electrical applications. Not GPUs. Not hype. Wires, motors, transformers, transmission lines. And demand is accelerating fast. Most credible forecasts show 40–50% growth in copper demand by 2040, driven by the backbone of what we use every day: Grid expansion and replacement, Electrification of transport and industry, EVs that use 3–4x more copper than combustion vehicles, and Transmission buildout to connect renewables AI didn’t create the copper problem. Our friendly LLMs just made it impossible to ignore. Here’s the scientific reality: Copper has the highest electrical conductivity of any non-precious metal. It’s durable, corrosion-resistant, thermally efficient, and infinitely recyclable. There is no substitute that works at grid scale without major tradeoffs. Physics wins, as it’s been known to do again and again. The uncomfortable part? We’re not *actually* running out of copper. We’re running out of economically recoverable copper. Ore grades have fallen roughly 40% since the 1990s. What’s left is lower grade, more complex, more impure, and often written off as waste under traditional processing models. And yes, Life finds a way, but this has real consequences like higher electricity costs, delayed electrification in rural and underserved communities, more geopolitical concentration of supply and much more energy, water, and emissions per ton produced This is why the next copper cycle looks different. It has to. The winners won’t just be the companies that find new copper. They’ll be the ones that expand supply from what already exists. Because when you unlock stranded copper, you don’t just change unit economics. You change the outcomes that matter to everyone: Faster grid buildout, more stable power prices, new high-skill jobs in mining regions, and lower environmental and social tradeoffs Copper isn’t just an input to AI. It’s an input to equity, resilience, and economic mobility. This cycle isn’t a moment, I believe it’s the beginning of a structural reset, and we’re still early. #ChaoticGood #MicrobesAreHow #RealTalkTimebyLiz #WhatKeepsMeUpAtNight #Copper #Supplychain #Supercycle

Copper is moving from a cyclical commodity into a structural bottleneck. This chart shows a supply gap opening from 2027 onward that widens steadily into the next decade. Even under conservative assumptions, mine supply struggles to keep pace with demand driven by electrification, grid expansion, EVs, data centers, and energy storage. New projects are not arriving fast enough, ore grades are declining, and permitting timelines have stretched to a decade or more. The result is not a temporary imbalance, but a persistent deficit that compounds over time. What markets often miss is that copper supply cannot respond quickly to price signals. By the time higher prices incentivise investment, the demand has already moved on. That makes this cycle fundamentally different from past booms. If the deficit materialises as projected, copper prices will not just reflect growth expectations, but the cost of scarcity. And scarcity, once embedded in infrastructure, tends to reprice assets for much longer than investors initially expect. Source: Financial Times

The Iran war is pressuring copper on both the supply and demand sides simultaneously. I expect prices to move lower in the coming months. I've been watching the relationship between copper and the Kospi closely. The chart below shows why: both are proxies for global industrial demand, and they tend to move together. But right now, I think both are showing complacency toward Iran-war risks. Let’s start with the demand side. When energy prices surge, manufacturing and construction slow globally. That's textbook. The Kospi, one of the most heavily weighted indices toward copper-consuming industrials, has sold off since the war began but avoided a sustained unwind. Semiconductor earnings momentum, undemanding valuations, and government support have cushioned the blow. The index is still materially up year to date, which is masking how much the underlying industrial picture has deteriorated. The same story on the PMI side. The JPM Global Manufacturing PMI hit a 44-month high of 51.9 in February as tariff fears eased and order books improved. It slipped to 51.3 in March, but that reading doesn't capture the full drag from the war. Input prices are surging. Supply delays are lengthening. The next print will be softer. Now, what about the supply side? Nearly half of all global seaborne sulfur trade passes through the Strait of Hormuz. Sulfur is the feedstock for sulfuric acid, which is essential for refining copper, cobalt, and nickel. With Gulf refining at a standstill, sulfuric acid production is being disrupted at the source. This adds a structural constraint on copper output in key producing regions. So the war is suppressing demand through higher energy costs slowing the global economy, and constraining supply through sulfur and sulfuric acid shortages. That's a rare setup where the price signal can mislead you. Copper looks like it's holding up. In my view, the recent pullback is incomplete. Physical signals are weakening faster than prices suggest. A return to December levels in the Kospi, combined with a PMI reading at 49, would imply copper around $11,000 a ton. I think that scenario is underpriced. What do you think breaks first? Demand from the energy shock, or supply from the sulfur disruption?

The copper market is currently meeting in Shanghai - at what is truly an unprecedented time; and one in which there will be no shortage of things to discuss. The key piece of intrigue will surround benchmark TC/RC discussions. The concentrate market is immensely tight - with little sign of letting up. Under this severe strain few participants seem certain how miners' and smelters' discussions will resolve themselves. Some even seem concerned that the benchmark system itself could be broken by this years discussions. This will be paired with the continued questionmarks as to how smelters survive in this shockingly tight environment. Annual TCs were at USD 80/t only last year. This year however, spot levels have been consistently negative. The broad LME/CME arbitrage, and the potential for US tariffs on copper will also continue to be in focus. The US section 232 announcement earlier this year did, after all, indicate that tariffs of 15% and 30% could be phased in across 2027 and 2028 for cathode. Market sources and media reports have indicated that traders are pushing for extra supplies of cathode to send into the US in 2026. This fear of tightness has led to record high premium offers for 2026 in Europe and Korea, thus this disjointed cathode market is likely to be a key topic of discussion this week. The macro-picture also provides little certainty; with US tariffs, fears around China's growth and worries about an AI bubble also somewhat clouding the forward picture on the economic side of things. I have been saved the jet lag this year - but am sat in London excited to hear the gossip as it trickles out from Shanghai. Benchmark Mineral Intelligence Benchmark Copper #copper

Copper’s Structural Tightness: Inelastic Supply, Inventory Fragmentation and the Economics of Scarcity Copper’s current market strength is best understood not through short-term price movements, but through a deeper structural lens. What the market is increasingly reflecting is a persistent and widening gap between long-term demand growth and the mining industry’s limited capacity to deliver new, flexible supply. This is not a cyclical imbalance; it is a structural condition that has been building for over a decade. On the supply side, copper has become markedly inelastic. Declining ore grades, higher capital intensity, longer development timelines and growing regulatory and environmental constraints have reshaped project economics across major producing regions. Even at elevated incentive prices, the pipeline of advanced projects remains thin, and production growth struggles to keep pace with underlying demand. In economic terms, the supply curve has steepened significantly, reducing the market’s ability to self-correct through price signals alone. This rigidity has been compounded by an increasingly fragmented inventory structure. While global visible stocks have risen, a disproportionate share has been accumulated in the United States, particularly in COMEX warehouses. This geographic concentration has reduced effective liquidity in other regions, creating localized scarcity despite higher aggregate inventories. As a result, premiums for immediate physical delivery outside the US have widened, reinforcing the perception of tightness across international markets. Inventories, in this context, are no longer a neutral buffer but a source of distortion. Demand dynamics remain structurally supportive. Copper consumption is now anchored in long-duration investment themes such as electrification, grid expansion, renewable energy integration and data-driven infrastructure. These are not discretionary or easily deferred uses of capital; they are embedded in national energy strategies and corporate investment plans. Unlike past cycles, copper demand today is less sensitive to short-term economic fluctuations and more closely tied to irreversible structural transformation. Overlaying these physical fundamentals is a changing monetary environment. Expectations around interest rates, liquidity conditions and currency stability have elevated copper’s role beyond that of a traditional industrial input. It increasingly functions as a real asset linked to long-term growth and strategic infrastructure, attracting capital from both industrial consumer - financial investors seeking exposure to tangible scarcity. For producing jurisdictions such as Chile, this environment represents a strategic crossroads. High prices alone will not translate into production growth without regulatory certainty, efficient permitting and competitive investment frameworks. The global copper market is delivering a clear signal: scarcity is no longer episodic, but institutional.