The "import grabbing" effect in the United States is fading, and copper prices may continue to decline in the coming months

The "import rush" effect in the United States is about to disappear, coupled with a significant slowdown in market demand growth, JP Morgan warns that copper prices may face downward pressure.

According to CCTV News, on July 30 local time, U.S. President Trump signed a notice announcing that starting August 1, a 50% tariff will be imposed only on semi-finished products such as copper pipes, copper wires, and cables, as well as copper-intensive manufactured goods, but refined copper, including cathode copper and anode copper, which is mainstream in international trade, will be exempted.

With the astonishing shift in copper tariff policy, copper prices have recently experienced dramatic fluctuations from soaring to plummeting, dropping over 20% last week. According to the Chase Trading Desk, JP Morgan's latest research report predicts that although base metal prices are performing strongly in the short term, due to the retreat of the "import rush" and slowing demand, copper prices may face more bearish pressure in the coming months, potentially falling to around $9,000 per ton.

The report also mentions that the weak U.S. non-farm payroll data in July may indicate cracks beginning to appear in the hard data of the U.S. economy, and market expectations for the Federal Reserve to cut interest rates in the second half of the year are rapidly heating up. Historical data shows that cyclically sensitive copper and base metals typically perform poorly before and after the Federal Reserve's interest rate cut cycles, even during the 1995 soft landing rate cut period.

The decline of the U.S. "import rush" effect drags down global supply-demand balance

The report indicates that U.S. refined copper imports surged in the first seven months of this year, with cumulative inventory increasing by about 560,000 tons, far exceeding normal levels. As the tariff policy becomes clear, the "import rush" effect will gradually fade.

The spot price structure has reflected this change. The report points out that LME London copper inventories may rapidly increase due to the direct delivery of excess U.S. inventory to LME copper warehouses in New Orleans and other locations, and the futures curve structure has shifted to a deeper contango state.

Although COMEX New York copper cannot completely decouple from LME copper and trade at a significant discount, the price difference is insufficient to incentivize large-scale re-export of inventory.

This dynamic change will drive U.S. import volumes down to extremely low levels in the second half of the year, allowing more copper to flow to other global markets.

JP Morgan expects that after the adjustment of the U.S. "import rush" effect, the global refined copper market will see a supply surplus of 165,000 tons in the second half of the year, which is about 280,000 tons more relaxed compared to the same period in the past two years.

Copper demand growth will significantly slow down in the second half of the year

The report also shows that since the beginning of the year, driven by multiple factors such as the "export rush" effect and consumption stimulus policies, China's refined copper demand has increased by nearly 7.5% year-on-year, but the growth has slowed down in June.

JP Morgan stated that while the copper end markets such as transportation, air conditioning, consumer durables, and machinery still maintain growth, the growth rate will significantly slow down due to earlier demand overdraw.

The report predicts that the global copper demand growth rate in the second half of the year is expected to be only 1.1%, far lower than the 4.5% in the first half.

Weak supply provides medium-term support for copper prices

Despite facing downward pressure in the short term, the downside potential for copper prices is still limited by supply vulnerabilities.

The report shows that the concentrate market remains tight, limiting the growth potential of refined copper production capacity. JP Morgan has lowered its 2025 mine supply growth forecast from 2% at the beginning of the year to nearly zero growth, mainly due to the downward adjustment of production expectations for the Kamoa-Kakula project and the impact of the El Teniente mine accident.

This structural constraint on the supply side provides important support for copper prices.

JP Morgan believes that unless there is a more severe deterioration in the macroeconomy leading to a recession (which is not currently the bank's baseline forecast scenario), copper prices will find support at or below $9,000 per ton and attract bottom-fishing buyers.

By 2026, copper prices are expected to find more solid support, with JP Morgan forecasting that mineral supply will grow by about 2.8%