BHP Group faces potential downside risk to its copper-driven earnings as a recent rally in the metal appears inflated by concerns over U.S. tariffs, according to market analysis.
Copper prices have surged 16% on the London Metal Exchange (LME) this year, but a portion of the gains may reflect speculative positioning tied to fears of Section 232 tariffs on metal imports. The price dynamics between LME and COMEX futures highlight a geographical distortion, with physical copper being diverted to the U.S. in anticipation of potential trade restrictions. LME contracts are in backwardation, while COMEX contracts show slight contango, indicating short-term supply tightness in the U.S.
Analysts warn that copper’s upward move may have already priced in much of its long-term structural support. If the tariff-related risk premium unwinds, prices could retreat toward fundamental support levels. The metal accounts for 54% of BHP’s projected earnings before interest, taxes, depreciation, and amortization (EBITDA) for fiscal 2026, underscoring the company’s growing reliance on copper over iron ore.
BHP’s shares could face pressure if copper prices weaken, particularly as the metal overtakes iron ore as the company’s top revenue contributor. The interplay between trade policy uncertainty and physical market flows adds complexity to the outlook for both copper and BHP’s financial performance.
