Can industrial metals hold up if the US-China truce falters in H2?

Copper’s soaring. Silver’s holding ground. And a shaky 90-day trade truce between the US and China has markets breathing a little easier - for now. But under the surface, things aren’t quite so smooth.

Copper’s been swinging wildly, smelters are running on negative margins, and silver’s safe-haven shine is fading fast. China’s buying big, but stockpiles are thinning, and treatment fees are deep in the red.

As H2 looms, the real question isn’t whether metals can climb - it’s whether they can stay there when the trade peace starts to crack.

The trade truce that bought time

Markets love a good headline - and the 90-day US-China tariff pause delivered exactly that. After months of tit-for-tat tariffs and escalating tension, both sides agreed to put the brakes on. 

Tariffs were slashed dramatically: the US trimmed duties on Chinese imports from 145% to 30%, while China eased back from 125% to 10%. Investors exhaled, and industrial metals caught a bid.

Copper futures rallied. Silver clawed back some ground. The risk of a full-blown trade war was, at least momentarily, off the table. According to RBC, the reprieve “could be a step toward reducing the economic risk” that had been weighing heavily on the market.

In short, the truce gave metals room to breathe - but it didn’t change the game entirely.

Beneath the surface, it’s complicated

Let’s start with copper. On paper, it looks strong - up nearly 16% year-to-date. But that stat masks just how volatile the journey has been. After hitting all-time highs in March, copper prices nearly collapsed through the $4.00/lb level just weeks later. That’s not the mark of a calm, balanced market, it’s one riding a wave of uncertainty.

Source: Trading view

And then there’s China. In April, the country imported nearly 3 million tonnes of copper concentrate - the highest monthly figure in five years and up 24% compared to the same period in 2024. Sounds bullish, right?

Source: China’s Customs Bureau, Bloomberg

But here’s the twist: smelters are paying to take this material. Yes, you read that correctly. Treatment charges - the fees miners pay smelters to refine concentrate - have flipped negative. Spot TC/RCs hit a record low of minus $57.50/tonne. That means Chinese smelters, despite gorging on supply, are effectively losing money just to stay in the game.

And it’s not just about supply and demand - it’s about who’s moving the pieces. Freeport-McMoRan resumed exports from its Grasberg mine after getting the green light from Indonesia, while a Glencore smelter outage in the Philippines rerouted even more cargoes to China. But this windfall may be short-lived. Freeport’s domestic Indonesian smelter is set to come online by September, potentially cutting off a key source of Chinese feedstock.

Silver’s struggle to shine

Silver isn’t faring much better. While it briefly bounced on the back of a softer US dollar and growing Fed rate cut bets, that support is starting to wobble. With signs of easing global trade tensions, silver’s appeal as a safe-haven asset is weakening.

At the same time, silver’s industrial role - particularly in electronics and semiconductors - is coming under pressure. The Trump administration’s move to blacklist several Chinese chipmakers has raised concerns over demand for silver-heavy tech components. So while the metal hovers around $32, its footing looks increasingly fragile.

Real-world friction in the scrap market

Step away from the trading screens, and the confusion continues. In the US, scrap copper sellers are scratching their heads. They see copper trading at over $4.60/lb in New York and expect strong payouts - but recyclers are quoting prices based on London benchmarks, which are sometimes 40 cents lower.

This disconnect has led to frustration and accusations of profiteering. But as Utah Metal Works president Mark Lewon puts it, “We’re not working on giant margins - we’re just pricing to the real market.” With tariffs distorting flows and global benchmarks diverging, what sellers see on the screen isn’t always what they get at the scrapyard.

Some tariffs are now paused or cancelled, and that’s narrowing the gap a bit - but the confusion is a symptom of a much larger issue: trade policy is still warping the way metal moves.

Eyes on H2: Can the rally hold?

All of this brings us to the heart of the matter: the second half of the year. JP Morgan notes that Chinese buyers have likely brought forward purchases in anticipation of tariff relief, which means demand could slow just as global supply rebounds. Freeport’s in-country smelter, Glencore’s recovery, and easing restrictions could all bring more metal to market.

Add in a potential Section 232 tariff on US copper imports, and things get even trickier. JP Morgan warns that “prices above $9,500/mt could face Chinese price sensitivity,” and expects that the micro tailwinds keeping copper prices afloat could start to unwind.

For silver, the threat is more macro: if the Fed decides to hold rates steady and global trade stays stable, the safe-haven narrative weakens. And while industrial demand might prop it up to a point, tech restrictions and cooling chip demand could drag.

Technical outlook: The Calm Before the What?

The US-China trade pause was a welcome relief,  but it hasn’t solved the deeper imbalances lurking in the industrial metals market. Copper and silver have shown resilience, but their foundations remain shaky. Treatment charges are upside-down, demand is front-loaded, and policy risk still looms large.

So, can industrial metals hold up if the truce falters in H2? They might. But don’t be surprised if the ground beneath them starts to shift - fast.

At the time of writing, Copper is experiencing a significant price slump within a sell zone, hinting at potential follow-up sells. However, the volume bars show that sell pressure is waning, hinting at a potential price reversal. Should the slump continue, prices could be held at the $9,328 and $8,950 potential support floors. Should we sound a price reversal, prices could encounter a resistance wall at the $9,660 resistance level. 

Source: Deriv MT5

Silver is also seeing a significant price slump in a sell zone, hinting at potential follow-up sells. The volume bars show that sell pressure is waning, hinting at a potential bounce. If the slump continues, prices could be held at the $31.65 and $31.10 support levels. Should we see a bounce, prices could be hit at the $33.95 resistance wall. 

Source: Deriv MT5

Disclaimer:

The performance figures quoted are not a guarantee of future performance.

The information contained within this blog article is for educational purposes only and is not intended as financial or investment advice. The information may become outdated. We recommend you do your own research before making any trading decisions.