Copper's rally is running into three powerful headwinds. Prices are hovering near $13,300 per metric ton in London as traders weigh a looming White House tariff decision, manufacturers switching to aluminium, and geopolitical risks tied to the Iran conflict.

The tariff decision

The US Commerce Department delivered a key report to President Trump recently — one that will inform whether he expands copper import tariffs beyond the semi-finished products already targeted. Traders are scrambling for intel on the agency's recommendations, but there's no guarantee Trump follows the advice.

The administration's track record makes this especially hard to read. Trump floated the idea of copper tariffs in Jan. 2025. Six months later, he limited them to semi-finished products, sparing the refined metal traded on exchanges in New York, London, and Shanghai. Goldman Sachs reportedly sent a mea culpa to clients after advising bets on a price surge that never came.

Many traders now expect Trump to preserve the status quo and pledge another review. None are ruling out broader tariffs either.

Why manufacturers are quietly switching metals

While traders watch Washington, manufacturers are making a longer-term bet against copper. Ferrari ($RACE) and BMW ($BMW) have both rolled out new models featuring aluminium wiring, joining TeslaTSLA

and a group of Chinese EV makers including XPeng and Xiaomi.

The price gap is the main driver. Aluminium trades at about $3.1K per ton, roughly one-quarter the price of copper. The copper-to-aluminium price ratio remains around 4.2, above the threshold where manufacturers typically begin switching metals.

Aluminium isn't a direct replacement. Because it is less conductive than copper, it requires conductors about 1.6 times larger to deliver the same electrical performance. It's also cheaper to produce but more energy-intensive, raising emissions concerns.

Still, the list of companies making the switch is growing. BMW first used aluminium conductors in 2011 and now deploys them in both high and low-voltage systems. Stellantis recently started swapping copper wiring for aluminium, according to an industry source familiar with the matter. Daikin, the world's largest air conditioning manufacturer, said in its 2025 annual report it was "maximizing cost reductions by switching from copper to aluminium."

JP Morgan estimates the substitution trend will affect ~2% of global copper demand this year. In a more aggressive scenario, that figure could reach 6% by 2030.

The macro pressure adding to the pile

Separate from tariffs and substitution, the Iran conflict is creating its own drag on copper. Higher oil prices slow global economic growth, and copper demand is tightly linked to that growth. JP Morgan estimates that every 10% increase in oil prices due to a supply shock could dampen global GDP by 0.16%. The bank estimates copper demand's sensitivity to GDP at a ratio of 1.2, meaning a 1% drop in global GDP could reduce copper demand growth by 1.2%.

If Brent oil hovers around $110 per barrel for the rest of 2026, JP Morgan says its copper demand growth forecast could be cut by 1.4 percentage points.

The bank sees a medium-term support zone of $11.1K to $11.2K per ton. Chinese buyers have been buying the dip, with inventory de-stocking accelerating to -55kt week over week as of mid-March, which has provided some price support. JP Morgan's forecast path shows copper declining from $13.5K in Q2 2026 to $11.6K by Q2 2027.