Key Highlights

  • Copper futures climbed 1.67 percent toward $6.60 per pound, their highest level in two months.
  • Shortages of copper concentrate and scrap copper in China drove treatment charges and market spreads higher.
  • Traders remained cautious over prospective new US tariffs on copper, encouraging shipment diversion into the US.
  • China's manufacturing activity slowed to a four-month low in July.

Supply Constraints Push Prices to a Two-Month High

Copper futures climbed toward $6.6 per pound on Tuesday, up 1.67 percent and reaching their highest level in two months as ongoing supply constraints continued to tighten market conditions. Analysts cited shortages of copper concentrate and scrap copper in top consumer China, driving treatment charges and market spreads higher as processors compete for limited raw material availability.

Traders also remained cautious over the prospect of new US tariffs on the metal, which has encouraged the diversion of copper shipments into the US ahead of any potential implementation. This tariff-driven diversion has effectively pulled supply away from other markets, contributing to the tightness observed in global copper availability outside the United States.

Structural Demand Growth Offsets a Softening Chinese Manufacturing Backdrop

In addition, copper continued to draw support from its favorable long-term demand outlook, fueled by the global shift toward clean energy and the rapid expansion of artificial intelligence data centers. These structural demand drivers have provided persistent support for copper prices even amid periods of macroeconomic softness in key consuming regions.

Meanwhile, private data showed China's manufacturing activity slowed to a four-month low in July, as output and new orders expanded at a weaker pace, dampening the near term demand outlook. The Politburo also indicated last week that it would continue relying on existing policy measures instead of rolling out broad-based stimulus, suggesting Chinese authorities are not currently planning to introduce major new demand support measures despite the softening manufacturing data.

Balancing Tight Physical Supply Against a Softening Chinese Demand Signal

Copper's near term trajectory will likely depend on how the tension between tight physical supply, driven by concentrate and scrap shortages plus tariff-related shipment diversion, and softening Chinese manufacturing activity ultimately resolves. Should supply constraints continue to dominate, prices could extend their advance even against a weaker demand backdrop in China.

However, should Chinese manufacturing weakness deepen further without additional policy support from Beijing, this could eventually offset some of the current supply-driven price strength. The absence of broad-based stimulus plans suggests Chinese demand conditions may remain a variable to watch closely, even as the metal's long-term structural demand story tied to clean energy and AI infrastructure continues to provide a supportive backdrop.

Conclusion

Copper's climb to a two-month high reflects the current dominance of supply-side tightness, driven by Chinese concentrate and scrap shortages alongside tariff-related shipment diversion, over near term demand concerns tied to softening Chinese manufacturing activity. Whether prices extend their advance may depend on how these competing supply and demand dynamics evolve, along with any developments regarding the prospective US tariffs on copper. The metal's structural long-term demand outlook tied to clean energy and AI infrastructure continues to provide an underlying source of support regardless of near term fluctuations.