In July 2023, the U.S. recorded a new import record of 225,094 tons of refined copper and copper alloys. This figure represents the highest monthly import level since 1990, showing a 78% increase compared to the previous month and an 8% increase compared to last year. This unprecedented rise is attributed to traders' efforts to import materials before potential tariffs are imposed.
Analysis of the Copper Market Situation
Refined copper imports to the U.S. have increased while the country is trying to reduce its reliance on imports. However, statistics show that refined copper imports have nearly increased sixteenfold since 2015. Meanwhile, domestic copper production is under severe pressure due to a decline in active mines.
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Challenges and Opportunities in the Copper Supply Chain
The U.S. has rich copper resources, but the existence of only two active primary copper smelters in the country acts as a major bottleneck in the copper supply chain. In other words, new production from domestic mines does not easily convert to domestic refined copper. Rio Tinto's large copper project in Arizona, which could supply more than a quarter of U.S. copper needs, may be forced to export some of its concentrate for processing abroad due to economic issues in the smelting process.
Given that processing and refining costs have turned negative due to competition for rare concentrate, investment in domestic processing capacity in the U.S. has become a significant challenge. Several policy responses have been proposed by Rio Tinto to improve this situation, including supporting domestic processing costs and imposing tariffs on cathode imports.
However, a system that encourages widespread imports of refined copper while allowing concentrates extracted from the U.S. to be sent abroad may lead to the creation of two-way maritime flows that contradict the government's efforts to engineer a shorter supply chain.
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