SMM Analysis | June 30 marks a critical milestone in the U.S. Section 232 copper investigation. Will refined copper tariffs proceed as expected? Whether the outcome is a broad tariff, targeted measures, or a delay and exemption, the decision could reshape the COMEX–LME arbitrage, U.S. physical premiums, global copper trade flows, and regional supply dynamics.

South America remains the cornerstone of global copper supply, with Chile and Peru collectively accounting for more than one-third of global mined copper production. As electrification, grid modernisation, renewable energy deployment and AI-driven infrastructure investment continue to reinforce long-term copper demand growth, policy developments across the region are becoming increasingly important determinants of future supply availability.

Peru will hold its presidential runoff on June 7, drawing close attention from the mining industry. As the world's second-largest copper producer, any shift in mining policy could have significant implications for global copper supply. Investors are watching proposals related to environmental regulations and resource taxation. The election outcome may influence future copper project development and investment decisions.

The global copper scrap market is entering a period of structural tightening as geopolitical tensions and industrial policy increasingly reshape trade flows. The relationship between the United States and China sits at the center of this transition, particularly as Washington considers restricting exports of high-quality copper scrap in 2027 while China remains heavily dependent on imported secondary copper feedstock. China’s copper scrap imports remained strong in 2024 at 441,080 MT, underscoring continued demand from secondary refiners serving the EV, renewable energy, power grid, and manufacturing sectors. However, imports have collapsed in 2025 to 143,271 MT, with current projections for 2026 falling further to just 5,305 MT. The sharp decline signals a rapid deterioration in China’s direct access to imported scrap feedstock amid rising geopolitical friction and tariffs. China’s existing 10% tariff on US-origin scrap has already reduced the competitiveness of direct shipments, although clean high-grade material has continued to move because of favorable processing economics. Trade flows indicate that copper scrap is increasingly being rerouted through Southeast Asia rather than moving directly from the United States into China. US copper scrap exports to ASEAN rose from 170,687 tonnes in 2024 to 222,993 tonnes in 2025, while Chinese imports of copper scrap from ASEAN increased from 434,176 tonnes to 529,345 tonnes over the same period. The correlation strongly suggests ASEAN is emerging as a critical intermediary hub for scrap aggregation, processing, blending, and re-export into China. This shift reflects a broader restructuring of the global scrap trade as market participants adapt to tariffs, geopolitical risk, and the growing probability of tighter controls on high-quality US scrap exports. Countries such as Malaysia, Thailand, and Vietnam are increasingly functioning as alternative routing channels within the global secondary copper supply chain. The timing is significant because the United States continues to export around 1 million tonnes of copper scrap globally in 2025 while domestic secondary refinery production remains limited at approximately 50kt. This imbalance is becoming central to the policy debate in Washington. As US demand for copper accelerates through grid modernization, electrification, AI-driven data center expansion, and defense manufacturing, policymakers are increasingly questioning whether high-grade recyclable copper should continue flowing overseas while the US remains dependent on imported refined copper. Current policy discussions focus on retaining a larger share of premium copper scrap within the domestic market beginning as early as 2027. Although proposals currently stop short of a full export ban, any retention mechanism would still materially reduce export availability for high-quality grades such as bare bright copper and No.1 copper scrap. For China, tighter access to premium scrap has important implications beyond the secondary market. High-quality scrap directly competes with refined copper cathode because it offers high recovery rates with lower processing intensity than primary smelting. If imported scrap availability continues to tighten, Chinese refiners will likely need to increase refined copper purchases to maintain output levels. This dynamic could become increasingly supportive for refined copper markets globally. The primary copper market is already facing structural constraints from weak mine supply growth, declining ore grades, permitting delays, and years of underinvestment in new projects. A simultaneous tightening in high-grade scrap availability would amplify pressure on refined copper balances precisely as demand linked to electrification continues to strengthen. As a result, the market could see narrower scrap discounts relative to cathode, firmer copper premiums in Asia, and increased volatility across both COMEX and LME pricing. The secondary copper market is therefore becoming an increasingly important variable in the broader refined copper outlook. Ultimately, the copper scrap market is no longer operating purely on economic arbitrage. Strategic resource security is becoming a defining driver of trade flows and policy decisions. The rapid growth in ASEAN intermediary trade, combined with collapsing direct Chinese scrap imports and growing US policy intervention, signals that the global copper supply chain is entering a new phase of fragmentation — one that is likely to tighten both scrap and refined copper markets into 2026 and beyond. Author: Shairaz Ahmed, Principal Market Analyst For more information or to discuss market dynamics, you can contact me on shairazahmed@smm.cn

According to the China Earthquake Networks Center, at 5:52 AM Beijing time on May 26, 2026 (5:52 PM local time on May 25), a magnitude 6.9 earthquake struck the Antofagasta Region in northern Chile, with a focal depth of approximately 114 kilometers. The U.S. Geological Survey (USGS) measured the focal depth at approximately 109 kilometers. Within a 200-kilometer radius of the epicenter, 21 earthquakes of magnitude 3 or above have occurred in the past five years, the largest being a magnitude 7.3 earthquake on July 19, 2024. The Antofagasta Region is Chile's core mining area and a globally significant copper mine concentration zone. Following the earthquake, the global copper market quickly turned its attention to local mine production and transportation conditions. Codelco stated that due to low visibility in mine pits and localized power outages, the company had suspended some production activities and initiated safety inspection procedures. According to SMM, the affected mines under Codelco have now resumed normal production. Global mining giant BHP and Antofagasta PLC indicated that their operations were generally unaffected, but they had temporarily halted some operations in accordance with emergency protocols to conduct safety assessments of facilities. Chile's National Disaster Prevention and Response Service (SENAPRED) reported that the earthquake triggered landslides in some production areas, and Calama experienced power outages and localized water supply disruptions. However, no casualties or major infrastructure damage had been reported, and ports and major transportation facilities were currently operating normally. Although this earthquake was of relatively high magnitude with a deep focal point, given Chile's relatively mature seismic-resistant mining infrastructure system, the actual impact of this event on the global copper supply chain was temporarily limited, manifesting more as short-term sentiment disturbance. However, as the world's largest copper-producing country, Chile holds a pivotal position in the global copper supply chain. Data from China's General Administration of Customs showed that from January to April 2026, China imported a total of 9.9151 million mt in physical content of copper concentrates, of which 3.0526 million mt in physical content were imported from Chile, accounting for approximately 30.79%. Chile remained China's largest source of copper concentrates imports. Against the backdrop of already tight global copper concentrates supply and persistently low treatment charges (TCs), any production disruption from Chile's core mining areas could trigger copper price fluctuations. If subsequent situations arise such as prolonged mine shutdowns, hindered port transportation, or slow power restoration, this could further push up international copper prices and the performance of related non-ferrous metals sectors. As of now, major miners in Chile have not disclosed any significant facility damage or long-term shutdown information.

SMM Morning Meeting Minutes: Last Friday evening, LME copper opened at $13,624.5/mt. In the early session, it experienced wild swings and dipped to $13,575.5/mt. Subsequently, the center of copper prices shifted upward, reaching a high of $13,678/mt, before fluctuating downward to finally close at $13,635/mt, up 0.18%. Trading volume reached 16,200 lots, and open interest stood at 269,000 lots, a decrease of 3,435 lots from the previous trading day, indicating bears reducing positions. Last Friday evening, the most-traded SHFE copper 2607 contract opened at 104,870 yuan/mt. In the early session, the center of copper prices fluctuated downward, touching a low of 104,420 yuan/mt. Subsequently, it fluctuated upward, reaching 105,280 yuan/mt, before moving sideways to finally close at 105,090 yuan/mt, up 0.58%. Trading volume reached 33,600 lots, and open interest stood at 172,000 lots, an increase of 627 lots from the previous trading day, indicating bulls adding positions.