Copper prices have risen significantly as Chinese markets reopened following the Lunar New Year holiday, fueled by optimism surrounding potential reductions in U.S. tariffs on Chinese goods. Copper surged by 2.3%, nearing $13,200 per ton on the London Metal Exchange, with aluminum prices also climbing.
This price rally comes in the wake of speculation that the U.S. may ease the stringent tariffs previously imposed during former President Donald Trump’s administration. A recent court ruling has led to a proposal of a 15% tariff, which is far less severe than the earlier reciprocal tariffs. This development is expected to bolster China’s export-driven industries that rely heavily on metals.
The positive sentiment in the metals market aligns with gains in Chinese equities. The CSI 300 Index, a benchmark for mainland Chinese stocks, recorded strong growth during Tuesday’s trading session.
Projected Tariff Reductions and Their Impact
Morgan Stanley estimates that the average U.S. tariff on Chinese goods could drop from 32% to 24% under the new trade framework. Such a reduction would provide significant relief to Chinese exporters and, in turn, stimulate demand for raw materials like copper.
John Li, an analyst at Guangzhou Finance Holdings Futures, noted that this recent news from the U.S. is a positive signal for the metals market. Li added that factory demand in China is poised for recovery, further supporting the upward trajectory of copper prices.
Supply Challenges and Market Dynamics
Copper prices have remained consistently high since their peak in January, driven by fluctuating U.S. trade policies, supply disruptions at key mines, and growing demand expectations linked to the global energy transition.
However, the market is not without challenges. Rising inventories in China and the United States have put pressure on prices. Copper stockpiles in London Metal Exchange warehouses and other storage facilities have reached their highest levels since 2024, reflecting a mismatch between high prices and actual consumption.
Broader Implications
Aluminum and nickel prices have also climbed, with aluminum increasing by 0.8% to $3,113 per ton and nickel showing gains. Analysts from Allianz, including Chief Investment Officer Ludovic Subran, highlighted that while the U.S. Supreme Court ruling has weakened certain effective tariff tools, it has not dismantled the broader tariff structure.
Interestingly, this shift in trade dynamics has positioned China and countries in the Global South as key beneficiaries of the evolving trade landscape.
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