Senior executives at Mercuria, a commodity trading room, said China's copper reserves are expected to gradually reduce for months in a few months as markets suffer "the biggest tightening shock" when fearing U.S. tariffs.
The Geneva-based group said that as buyers are rushing to hand over copper before the Trump administration imposes taxes, it is attracting metals from the rest of the world to the country and competing directly with China for supplies.
Inventories of Chinese copper have dropped rapidly over the past few weeks, "at the current draw rate, these Chinese stocks may be exhausted by mid-June (zero)."
Inventories in the country fell nearly 55,000 tons last week to 116,800 tons, the biggest weekly record decline, according to data from Shanghai Futures Exchange data.
"This is probably one of the biggest tightening shocks in this market ever," Snowden said. He added that Beijing has a “thin razor inventory buffer” to meet domestic demand.
Kostas Bintas, the company's head of metals and mining, said the United States is "the first time" to compete with China for copper supply, which is likely to strengthen prices.
The impact of U.S. trade protectionism on the copper market has increased pressure on China's domestic demand and retaliatory collections, which could encounter important flows of copper scrap.
Metal buyers have been importing large quantities of copper into the U.S. before possible tariffs, which may be due to an investigation initiated by U.S. President Donald Trump, suspected of "dumping and excessive production of metals." He has imposed a 25% tax on imports of aluminum and steel.
Since 2018, copper stocks in U.S. COMEX warehouses have climbed sharply to their highest levels this month.
Helping supply to the U.S. is a transaction arbitrage caused by investors' concerns about tariffs. This is higher than that of the New York COMEX exchange price compared to the London Metal Exchange price.
This so-called spread creates profitable arbitrage opportunities for traders willing to buy copper futures contracts in London and sell contracts in New York. On Monday, the spread was nearly $1,200 a tonne, up $1,600 in March, well above its long-term average.
Bintas said some traders eager to sell copper on COMEX have been desperate to try to pay more to cover these short lineups before introducing any new tariffs in the United States.
Analysts say China's retaliatory tax on U.S. imports could also break into the crucial copper scrap market, increasing the tightness of the Chinese market.
If the United States bans exporting copper scrap, it could be a big exporter, and that could worsen. According to commodity pricing Fastmarkets, it shipped 960,000 tons in 2024, almost half of which went to China.
In January and February, the data available for the latest data totaled 142,000 tons, compared with 149,000 tons in the same period last year.
Andrew Cole, a metals analyst at Fastmarkets, said he expects “at least March to May, there will be a big conflict in the transportation of waste from the U.S. to China.
"This is the escalation that has led to the compression of China's supply, and we have always expected to develop as this year," he said.
But despite the depletion of Chinese stocks, the market will actually react before the stock reaches zero, with higher prices, attracting more copper and scrap imports.
"It's on the record of the copper unit entering the United States. As these two troops met, it created an unprecedented copper race," he said.