China’s trade data for July shows strong demand, with more imports of unwrought copper and copper ores compared to the previous month. This trend continues despite worries about possible US tariffs on unprocessed copper, which were thought to impact trade. US tariffs, affecting only a few copper products, did not push Chinese importers to shift to the US market. It might have been wise for them to wait for tariff decisions, as this could lead to lower prices from other countries. The increase in copper ore imports contrasts with falling treatment and refining charges, indicating a shortage of raw materials. This decline suggests that processing challenges are affecting metal availability. China’s demand for copper is strong, as evidenced by the rise in July 2025 imports. Recent industrial production numbers for July also exceeded expectations. Traders should pay less attention to the uncertainty of US tariffs since these have not greatly changed trade flows. One key indicator is the drop in treatment and refining charges, which are now at multi-year lows of about $15 per tonne. This indicates a shortage of copper concentrate for smelters. If there is not enough raw material now, there will likely be less refined metal available in the future. We can already see this tightness in global warehouse stocks. As of early August 2025, registered copper inventories on the London Metal Exchange have fallen to just 45,000 tonnes, the lowest level since late 2024. This shortage indicates that demand is currently outpacing supply. This situation is similar to market conditions in 2021 when a squeeze in concentrate supply and declining exchange inventories led to a surge in copper prices. The current circumstances suggest a similar pattern may be unfolding. Given these supply constraints and steady demand, we believe the market is undervaluing the risk of a price spike in the coming weeks. We should look to establish long positions through futures or buy call options to take advantage of the potential price increase. This strategy will allow us to benefit from the emerging supply squeeze.

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