US tariffs threaten to halt copper's surplus, as prices reach a new high
Analysts say that the prospect of U.S. tariffs on imports could drive copper prices to record levels, even though there's no shortage of the metal in the world. This is because the incentive to ship to the United States will drain inventories from other countries.
After recent orders to remove 65,400 metric tons of copper from LME storage, the price of three-month 'copper' on the London Metal Exchange reached as high as $14,343 per metric ton. This is within striking distance of $14,527.50, the previous record.
The large-scale order - also known as warrant cancellations- followed last week's increased availability of material on the LME
Analysts say the rally is due to a lack of copper outside of the U.S., rather than a global shortage of the metal. Copper is essential for power grids and data centres, as well as electric vehicles.
The higher U.S. metal prices have encouraged traders into COMEX storage facilities ahead of the potential tariff on copper refinery from 2027. This has led to a reduction in inventories and a tightening of what was expected to be an oversupply market.
The threat of tariffs has reshaped the market
Robert Edwards is the principal copper analyst for CRU. He said that, if copper stocks in the U.S. are no longer available, the threat of tariffs will turn what was supposed to be a surplus into "at worst?a balance market".
COMEX inventories are now up for 46 consecutive days, reaching a record of 675.185 metric tonnes?through arbitrage trading that takes advantage of higher COMEX price. CRU projected a global copper surplus of 639,000 tons for 2026.
Edwards stated that if imports from the United States continue to be as high as they are, it will 'look' like a market with a deficit in reality.
The U.S. imports almost 885,000 tonnes of refined copper cathodes during the first half 2026. This is 3% higher than the same period in 2025, when the threat of a similar tariff hung over markets, and double the amount imported in 2024's first six months.
The U.S. imports a record 1,64 million tons for the entire year 2025.
Last year, the final exemption of tariffs for refined copper sent prices crashing.
The U.S. Commerce Department had to submit a report on the copper market to?the White House by June 30, this year. President Donald Trump would then decide whether or not to proceed with a 15% duty from January 1, 2027. This will increase to 30% in 2028.
Macquarie's Alice Fox said that based on their calculations, it would take years for the metal to be consumed. She was referring to COMEX stocks. Macquarie believes that the downside risks are greater for?copper. However, if Trump imposes a tariff on copper, prices will "massively increase", she said.
GLENCORE SAYS UNCERTAINTY IS DRIVING RALLY, NOT TARIFFS
Glencore's CEO, who is also a miner and trader, says that any announcement about tariffs, whether it be a zero-percentage, 15%, or 30% duty, will likely cause prices to fall, because the market finally has reassurances.
Gary Nagle stated on a earnings call that "you'll have high stockpiles of copper in the U.S. which will over time be used... and not exported again." This is due to the cost involved. The duty on copper stored in COMEX warehouses has already been paid.
Other regions will continue to experience tighter supply if these inventories remain in the United States. Amelia Fu, the head of commodities markets strategy at Bank of China International, said that China, "the world's biggest copper-smelting country", has limited capacity in order to offset shortages elsewhere due to strong domestic demand.
Fu stated that the tightening market is due to low stocks, mine disruptions and a Gresik Smelter outage in Indonesia. We could see new copper price records in the coming weeks or even months.
(source: Reuters)
