Will Sino-US Tariff Easing Lead to Rush Export of Copper Rod? Entrepot Trade Still Faces Intractable "Origin" Issue[SMM Analysis]

On the afternoon of May 12, the day after the conclusion of the Sino-US Geneva Economic and Trade Talks, both sides issued the "Joint Statement on the Sino-US Geneva Economic and Trade Talks", reaching a consensus to mutually suspend the 24% tariffs for 90 days while maintaining the 10% tariffs. Secondly, they simultaneously revoked two executive orders imposing additional tariffs, including Executive Order 14259 and Executive Order 14266 signed by the Trump administration on April 8 and 9, respectively. China also announced in response the cancellation of the additional tax measures against the US, as outlined in Announcement No. 5 and No. 6 of 2025 by the Customs Tariff Commission, which means the cancellation of the 91% additional tariffs imposed as a countermeasure on US goods. With the easing of Sino-US tariff policies, how has the export market for copper cathode rods responded? Has there been a rush in exports? Below is a detailed analysis:

Since the release of the joint Sino-US statement on May 12, the Sino-US trade war conflict has eased more than market expectations. Subsequently, SMM learned that there has been a surge in demand for shipping space on China-US maritime routes, primarily due to two reasons. Firstly, with the 90-day easing period for Sino-US tariffs, a large number of orders have been re-exported, leading to a sharp increase in container bookings from China to the US. Secondly, due to previous tariff issues, shipping companies have gradually reduced their US-bound shipping capacity by 20-40% since April, and the need to restore this capacity has also contributed to the current tightness in shipping routes. So, what is the actual impact of the easing of Sino-US tariffs on the export market for copper semis, particularly copper rod? Has there been a rush in exports as the market expected? How should the subsequent market interpret this? SMM provides a detailed analysis from both direct and indirect impacts as follows:

Firstly, from the perspective of direct impact, according to data from the General Administration of Customs of China, in 2024, the total export volume of refined copper wire with a maximum cross-sectional dimension exceeding 6mm to the US was 213.14 mt, accounting for 0.35% of the total export volume. The total export volume of other refined copper wires to the US was 646.075 mt, accounting for 0.97% of the total export volume. For the copper wire rod market alone, the direct impact is minimal, and more attention can be paid to the indirect impact.

The indirect impacts of tariff disputes on the domestic copper wire rod export market mainly fall into two aspects, namely end-use consumption and re-export trade.

Demand side, according to SMM, the current rush export behavior of some copper semis-related end-use products has not yet been transmitted to the copper cathode rod market. Currently, most copper rod enterprises are experiencing weak new orders and shipments. Enterprises anticipate that if there is an increase in rush export consumption, it will take at least until Q3 for this to gradually be transmitted to copper rod enterprises.

From the perspective of entrepot trade, most of the domestic copper cathode rods are exported to the Southeast Asian market, with a significant amount of copper wire rod being further processed and then exported to the European and US markets. Therefore, for domestic entrepot trade, firstly, the 90-day grace period announced on May 12th had a minimal impact. More attention should be paid to the 90-day period announced by Trump on April 9th, during which the implementation of new tariffs on over 70 countries and regions, excluding China, would be suspended. This period implies that negotiations would commence in early April and need to yield results by early July. As early July approaches, overseas clients involved in entrepot trade are becoming increasingly hesitant. According to SMM, there has been a nearly 30% decline in new export orders placed since May. Most clients are waiting to see the outcome of the 90-day grace period and whether there will be more competitive tariff results. Secondly, although applying for a processing manual can exempt some VAT and tariffs, for entrepot trade, the issue of origin certification remains unresolved. Therefore, the current volume of copper rod exports primarily consists of previous orders, long-term contracts, and local consumption in the Southeast Asian market.

Meanwhile, it should be noted that due to the price characteristics of copper, for copper wire rod products, even if tariffs can be reduced to a certain extent through processing trade, international trade operational skills, and future negotiation outcomes, low value-added products still face significant cost increases.

In summary, after copper wire rod exports shifted towards processing trade this year, monthly export volumes have stabilized. However, as the tariff relief period approaches its end, there has been a certain decline in export orders for copper wire rod. Meanwhile, the processing fees for copper cathode rod exports have also decreased. The future of the export market still hinges on the outcomes of negotiations between the US and more countries, as well as the growth of local consumption in Southeast Asia. SMM will continue to monitor global trade conditions and the copper semis export market.