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The global copper market is flashing signs of tightness, as strong Chinese buying squeezes scant supplies even in the face of worries about a looming industrial downturn.

It’s a counterintuitive dynamic: copper is typically seen as a bellwether for the global economy — and expectations for growth are being rapidly downgraded due to the trade war between the US and China, and other countries around the world.

Yet while copper prices plunged in early April after US President Donald Trump unveiled his so-called reciprocal tariff regime, they have since rebounded – helped by strong buying from China, according to numerous traders and industry executives. Since the start of the year, copper on the London Metal Exchange is up more than 8%, while the S&P 500 is down more than 4%.

“China’s copper demand indicators still look healthy for now,” analysts at Morgan Stanley said in a note. “The physical copper market looks tight.”

China is by far the world’s biggest copper market, making its buyers the most important driver of the market. A major question for the coming weeks is whether the recent tightness will prove to be only a blip before the full force of trade turmoil hits China’s factory sector.

Apparent demand growth in China has been running near double—digit levels this year, a pace that cannot continue, according to Wei Lai, vice head of trading at Zijin Mining Investment Shanghai Co., a unit of China’s top copper miner. “Demand will slow in the second half along with output,” he said.

Wired up

For now, traders point to several areas of demand strength.

Strong orders from State Grid Corp. of China, the world’s single largest buyer of copper, have spurred buying by the wire and cable makers that supply the power giant. Grid spending in the first three months of 2025 rose 25% on the year, and investment in new equipment rose by 60%.

Production of copper-intensive goods, from air-conditioning units to electric vehicles, has also been rising, according to Morgan Stanley. Purchasing of home appliances was up 16% during the five-day holiday at the start of May, ANZ Group Holdings Ltd. wrote in an emailed note.

When prices slumped to their lowest since 2023 amid the financial-market chaos that followed Trump’s unveiling of reciprocal tariffs, Chinese buyers siezed on the price drop to snap up material. The LME saw its highest hourly volume in nearly a decade, while some merchants notched up record weekly sales.

Kathleen Quirk, chief executive officer of US copper miner Freeport McMoRan Inc., told investors that despite the negative sentiment around tariffs, “the facts are that copper demand remains strong globally.”

“We are seeing improving demand trends in China, which has been particularly strong year-to-date,” she said.

Drawing down

Inventories of metal in Shanghai Futures Exchange warehouses fell by 136,000 tons in April for the largest four-week drawdown on record. Premiums in China are at the highest in more than a year, with premiums for African “equivalent grade” copper — which buyers typically turn to when other metal isn’t available – near the highest in at least five years.

That has prompted traders including Trafigura Group and Mercuria Energy Group Ltd. to draw on LME inventories, with available stockpiles in Asia falling to the lowest in a year.

Some traders said the sharp declines were an after-effect of China’s swoop on low prices last month: many people booked copper after global prices tumbled below $8,500 a ton, and only took delivery of metal in the following weeks. LME copper is now not far off $9,500 a ton.

The rebound in copper prices has already caused Chinese processors to be less enthusiastic about purchases, according to Ni Hongyan, vice general manager of Eagle Metal International Pte.

Shipping rush

And the current pinch is not just a function of demand: supply disruptions are also playing a part.

The threat of US tariffs on copper has spurred a huge rush to ship metal the US, pushing America’s monthly imports to a record high and drawing stocks away from other parts of the world. Chinese tariffs on US imports are reducing flows of scrap metal and forcing the Chinese industry to buy a greater proportion of virgin metal.

Kostas Bintas, the high-profile head of metals at Mercuria Energy Group Ltd., warned in March that the pull of metal to the US would leave China’s copper market perilously short. Still, the rush to get copper to the US is already beginning to slow, traders said, as risks rise that copper-specific duties are imposed before shipments arrive.

At a recent industry conference in China, there was a marked contrast between relatively bullish views from the stage and much more caution among delegates on the sidelines of the event. The tariffs stand-off between Beijing and Washington looms large, and China’s manufacturers already taking a hit.

Factory activity in China slumped solidly into contraction territory for April, with an official index plumbing its lowest level in more than a year. Crucially, a subindex of new export orders dropped to the lowest since 2022.

Morgan Stanley drew a comparison with 2008, when the copper price peaked some nine months after the S&P 500. “Demand will depend on how tariff negotiations and any China stimulus evolve, but 2008 illustrates how copper demand can fall with a lag when faced with a deteriorating economic backdrop,” they wrote.

Copper traded on the LME gained 2% to $9,551.50 a metric ton as of 3:12 p.m. in London. All other main LME metals except aluminum also rose.

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