Copper markets are poised for further gains, with Morgan Stanley highlighting a tightening supply landscape and strong investor inflows. Despite a recent dip, copper prices have surged 16% this year, and traders are racing to capitalise on potential US tariffs. With global inventories shrinking and supply concerns mounting, the metal’s bullish trajectory remains intact.
On Monday, copper for May delivery fell by 0.8%, settling at $4.67 per pound ($10,274 per tonne) on the Comex market in New York. However, prices have gained 16% year-to-date in 2025, underscoring strong momentum in the sector. February saw US President Donald Trump sign an executive order triggering a Section 232 review of copper imports, a move that could lead to import tariffs. These investigations evaluate whether foreign copper imports threaten US national security.
In response, leading commodity traders such as Glencore and Trafigura are accelerating shipments to the US before potential tariffs take effect, aiming to take advantage of price differentials. US copper prices have already traded at a premium of up to $1,300 per tonne this month, reflecting the market’s tightening supply conditions.
Morgan Stanley noted that while contango markets can be challenging for investors, backwardation—where the futures price is lower than the spot price—can attract inflows. The bank remains bullish on copper, citing strong fundamentals, dwindling inventories, and an increasingly constrained supply chain.
Chile, the world’s largest copper producer, saw a 24% drop in production in January, hitting a nine-month low. Meanwhile, US copper production continues to decline, with regulatory hurdles preventing new mining projects from coming online. While the prospect of tariffs could introduce future demand uncertainties, Morgan Stanley remains optimistic, emphasising that physical markets remain exceptionally tight.
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