Copper prices are set for a sharp downturn in the coming months, according to BNP Paribas, which has issued a stark warning that the industrial metal’s recent rally is unsustainable. The French bank cited the ongoing rush to ship copper to the United States before the potential implementation of a 25% tariff as a key factor in the recent price surge. However, with the timeline for these tariffs reportedly shortening, BNP now expects a significant price drop as demand slows and global supply rises.

Copper has seen a substantial price increase since the White House launched a broad investigation into national security risks associated with the metal, a move that could result in steep import tariffs. Earlier this week, copper prices in London reached a nine-month high, exceeding $10,000 per tonne, while US copper contracts also hit a historic peak. This divergence between US and global copper prices created a pricing dislocation, prompting traders to accelerate shipments to American buyers before tariffs take effect.

Estimates suggest that hundreds of thousands of tonnes of copper are currently en route to the US as market participants attempt to frontload inventory ahead of the policy shift. However, a Bloomberg report published this week suggested that the tariffs could arrive within weeks rather than months, leaving little time for additional shipments to be redirected.

Following the report, the metal’s rally lost momentum. As of today, copper is trading at $9,846.50 per tonne on the London Metal Exchange (LME), down 0.8% for the day, while US copper prices have declined by 0.1%.

BNP Paribas Forecasts a Market Reversal

BNP Paribas now predicts that copper prices will fall to $8,500 per tonne by the end of the second quarter, citing a combination of fading US demand and an expected surplus in global supply.

Wilson added that the focus will shift toward the broader impact of US trade policies on global demand. As protectionist measures restrict trade flows, BNP Paribas has revised down its global copper consumption growth forecast from 3.1% to 2.3% for the year. Additionally, the bank now expects a global copper surplus of 460,000 tonnes, a significant increase from its previous estimate of 124,000 tonnes.

Diverging Market Opinions

Despite BNP Paribas’ bearish outlook, not all analysts agree that copper prices will collapse. Some believe that structural demand drivers, particularly in China and the broader electrification movement, could support prices in the long term. China remains the world’s largest consumer of copper, and its economic policies play a crucial role in determining global demand. Recent stimulus measures aimed at boosting infrastructure and industrial activity could provide a counterbalance to the negative effects of US trade barriers.

The upcoming months will be critical in determining the trajectory of copper prices. If the US imposes the anticipated 25% tariff sooner than expected, the short-term market impact could be severe, particularly for traders who have stockpiled copper in anticipation of higher demand.

At the same time, a weakening global economic outlook, driven in part by rising protectionism, could weigh on copper demand beyond just the US. BNP Paribas’ revised forecasts suggest that the copper market is heading toward an oversupply scenario, which would likely pressure prices downward.

However, long-term trends, such as the transition to renewable energy and increased electrification, could support copper demand in the years ahead. The metal remains essential for electric vehicles, power grids, and battery storage, industries that continue to expand despite near-term economic uncertainty.

With the White House’s tariff decision looming, the copper market remains in flux. Investors and traders will be closely monitoring policy announcements, economic indicators, and supply chain disruptions to gauge the next phase of price movements. While BNP Paribas predicts a sharp decline in copper prices, opposing views suggest that underlying demand trends could provide some level of support.

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.

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