Pretiorates' Thoughts 86 – Red Metal, Red Alert
Published on June 24, 2025
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Pretiorates' Thoughts 86 – Red Metal, Red Alert
The global Copper market is in turmoil – and not because of a sudden boom in demand, but because of politics. Since US President Trump launched a so-called security investigation into possible import tariffs on Copper products in February, the wires have been flying. In April, over 170,000 tons of refined Copper were shipped to the US – a record that dwarfs everything since 2001. It is the same story as Gold & Silver...
Why the rush? It's simple: anyone who gets their Copper into the US before the introduction of 25% punitive tariffs will reap the full arbitrage, because futures on the Comex in New York are still trading around 10% higher than on the LME in London…
It's a race against the tariffs. Copper stocks on the COMEX continue to rise…
This flight to the US has side effects: Stocks in Shanghai and London are being cleared at a rapid pace. At the LME, stocks have shrunk by over 80%, which is just one day's consumption…
The result: massive backwardation – the spot price is up to USD 280 per ton above the three-month contract. This is not only rare, but also an acute warning signal. It shows that there is little Copper available in the short term…
China is so desperate that it is now starting to export surplus metal – unusual for a country that is traditionally the world's leading importer. Records even show that Mercuria has shipped directly from China to America – a trade flow that last appeared during a short squeeze in 2021.
While the metal circles the globe, the Copper smelters are left empty-handed. No Copper to process. The so-called treatment and refining charges for Copper concentrates (TC/RCs) have fallen into negative territory – which means that smelters are paying just to get their hands on the material. These charges should actually be the backbone of smelter profits. Instead, there is a state of emergency. The reason: China built up too much smelting capacity too quickly without the mines keeping pace with Copper extraction.
Source – Benchmark
Meanwhile, the US market will remain dependent on imports despite rich Copper deposits. Its own mines produce only 850,000 tons per year, but demand is 1.6 million tons. Chile, Canada, and Mexico together cover more than two-thirds of the difference. New projects such as Resolution (Arizona)…
…and Twin Metals (Minnesota) are bogged down in bureaucracy. And existing smelters? Of the several plants that once existed, only two remain in operation – in Arizona and Utah.
Bottom Line: Trump wants to use tariffs to increase Copper production in the US. But even if investment flows and the authorities take action, it will take years or even decades to develop new capacity. In the meantime, US companies will probably have to pay significantly more than their global competitors.
What is emerging here is more than a short-term bottleneck. It is a structural problem involving politics, infrastructure, and speculation. The Copper market has become a geopolitical stage – with Trump as the director, China as the overzealous builder, and the US as the nervous consumer.
The big question is: How long can the system withstand these tensions? Warehouses in London and Shanghai are emptying, increasing the risk of a squeeze. The Copper story of 2025 is an economic thriller that is just beginning.
We wish you successful investments!
Yours sincerely,
Pretiorates
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