Copper Tariffs Anticipations Reignited, Global Copper Rushes Back to the US

The copper market is reenacting last year's script. As expectations for a Trump administration import tariff on copper heat up again, global copper traders are once again scrambling to ship the metal to the United States, and a "tariff arbitrage" trade that once stirred up the annual $300 billion market is making a strong comeback.

The core engine driving this rush is the widening price gap between Comex and LME. The Comex nearby contract has surpassed $500/tonne over LME spot prices for the first time since last autumn. Henry Van, Head of Industrial Metals Analysis at Trafigura Group, stated, "All copper is being directed towards the United States, and it is quite conceivable that imports will return to 200,000 tonnes per month."

Last week, Trafigura also withdrew hundreds of millions of dollars worth of copper from LME warehouses, the largest scale since 2013. According to informed sources, this move was at least partly to capture the premium opportunity in Comex.

The tariff expectation is the fundamental logic behind this trade. The U.S. Department of Commerce must submit a report on the copper market assessment to Trump by June 30th, paving the way for potential tariffs to be imposed from January 2027. The Department of Commerce has previously suggested a 15% tariff on refined copper. Even if the tariff has not yet been implemented, the mere expectation of taxation is enough to maintain the momentum of copper continuously flowing into the United States.

The domino effect of a large influx of copper into the United States is becoming apparent. London copper futures hit $13,746 per tonne on Wednesday, with a cumulative increase of about 43% over the past year. Nicholas Snowdon, Chief Metallurgical Economist at Mercuria, warned that the focus of supply shortages would shift to LME, "If the tariffs start from the beginning of next year, there will be a very strong decrease in LME inventories in the third and fourth quarters."

However, this rush is not without resistance. Disturbances related to the situation in Iran are affecting the global freight market and exacerbating congestion at the Panama Canal, significantly increasing both the time and cost of shipping copper from South America to major U.S. ports. This has offset the arbitrage profits brought by the price differences to a certain extent and added variables to the pace and scale of this rush."