COMMODITIES 2025: Trump trade tactics loom over 2025 copper demand, prices

This is part of the COMMODITIES 2025 series where our reporters bring to you key themes that will drive commodities markets in 2025.

President-elect Donald Trump has been weighing the use of broad tariffs on imports from key trading partners. The planned tariffs from US President-elect Donald Trump could move copper prices further from market fundamentals and cloud the 2025 outlook on demand for the crucial industrial metal, analysts told S&P Global Commodity Insights.

Trump has vowed to hit Canada, Mexico, China and a slew of other countries with sweeping tariffs ranging from 10% to 100% as he prepares to return to the White House. Meanwhile, the president-elect has named loyalists to key positions, including some that have backed his protectionist trade agenda.

Taken at face value, many analysts see the possible tariffs as inflationary for the US and a potential drag on copper demand amid weaker global growth.

A "strong dollar adds downside risk to prices in 2025," Ronnie Cecil, a principal analyst for Commodity Insights, said in an emailed response to questions about the 2025 outlook for copper. "Most economists are downgrading 2025 growth forecasts in response to expected US tariff hikes."

Hurting global growth

Copper market fundamentals including supply and demand will take a backseat to US trade policy, assuming Trump slaps broad tariffs on many of the country's key trading partners, David Davidson, a Paradigm Capital mining analyst, told Commodity Insights. Copper would suffer if Trump is serious about casting a wide net of import penalties, analysts said. The move could bolster the US dollar and sustain high interest rates, as the US Federal Reserve grapples with likely inflation.

In addition, US trading partners might levy counter-tariffs against the US in response, among other trade penalties.

"If we get a tit-for-tat trade war, then kiss global economic growth expectation goodbye," Davidson said, echoing comments made by other industry experts.

The tariffs will make goods more expensive in the US and punish manufacturers that depend on imports for materials such as copper, said Jeffrey Sonnenfeld, senior associate dean at the Yale School of Management.

"This is going to be highly inflationary," Sonnenfeld said.

The potential tariffs, weighing on US imports, could, in turn, hurt a big export-based economy such as China, which accounts for roughly half of global copper consumption, Orest Wowkodaw, a mining analyst at Scotiabank Global Equity Research, said in a Nov. 19 note.

"While China has been attempting to revive its faltering economic growth this fall, it remains unclear if a future 'stimulus bazooka' designed to improve the metals-intensive property and construction segments is on the 2025 agenda," Wowkodaw said.

The copper market was negatively affected in 2024 due partly to economic malaise in China, where the metals-hungry property market has faltered. China reacted to slowing growth with stimulus aimed at reviving economic activity. But tariffs could force the country to do more.

"The one card China may play is a massive stimulus package to kick-start their economy, which could well offset demand elsewhere," Davidson said.

Short on concentrates

Commodity Insights has forecast a growing surplus in refined copper for 2025 but a deficit in copper concentrate markets amid scant mined supply. Global copper demand is projected to grow 3.7% in 2025, though risks tilt to the downside given Trump's tariff threats, Cecil said. China will need to use more stimulus, which typically helps support copper prices, according to Cecil and others.

The London Metal Exchange's three-month price of copper will average $9,307 per metric ton in 2024 and increase to $9,825/t in 2025, according to Commodity Insights projections.

On copper supply, analysts said deficits would continue to dog the concentrate market amid expanding smelter capacity and the extended shutdown of First Quantum Minerals Ltd.'s Cobre Panama copper mine. Panama forced the massive mine to close in December 2023, and analysts said they doubt that First Quantum would negotiate a 2025 restart of the operation, which used conventional milling and flotation to produce copper concentrate.

"Maybe in 2026," Davidson said of a Cobre Panama restart.

First Quantum still has a long way to go to rebuild trust in Panama, said Benjamin Cox, an industry consultant and the former CEO and executive chairman of Canada-based copper explorer Aston Bay Holdings.

"I just don't see it as being fixable in the short term," said Cox, who has worked with copper miners and teaches courses on mining industry negotiations.

Commodity Insights expects a modest supply deficit of 52,495 metric tons of copper concentrate in 2024, deepening to 847,764 metric tons in 2025.

Maybe not the hardest line

Still, Trump's tariff ideas did not seem to vex some mining and metal sector executives, who said they see potential growth despite the trade threats.

"There is a desire in both blocks of the world to grow," Rio Tinto Group CEO Jakob Stausholm said on a Dec. 4 call with investors and analysts. "There might be some changes. We can cope with that. We are a global business."

The giant diversified miner has copper and aluminum operations in the US.

Stausholm said there could end up being an upside to Trump's policies and pointed to the incoming US president's previous administration, when trade policies worked in Rio Tinto's favor. Aluminum executives have noted that higher US aluminum prices ended up bolstering sales from US operations.

"So, we don't have any fear for this," Stausholm said.

Trump may not be committed to full tariffs on close trading partners and could be using the threat of tariffs as a means to extract concessions. Trump's cabinet picks so far include loyalists such as Peter Navarro, who will take a hardline on trade, while some observers said other picks such as Marco Rubio, his selection for Secretary of State, and Scott Bessent, his choice for Treasury, might temper the more extreme tariff plans.

"I'm counting on Scott Bessent and Marco Rubio and others to bring some sense to this," Sonnenfeld said.