JPMorgan: Section 232 Tariffs Are the Core Trading Theme for Copper in H2
0xBroomberg
JPMorgan flags a stark contradiction: global refined copper is in surplus by over 500,000 tonnes, yet LME copper has rallied more than 40% year-on-year to roughly $13,600/t — driven not by demand, but by U.S. tariff policy reshaping where the world's copper sits.
Copper is oversupplied — so why is the price still rising?
JPMorgan's numbers: global refined copper surplus tops 500,000 tonnes in 2025, with another ~360,000 tonnes of excess likely in 2026.
Yet LME copper sits at roughly $13,600/t, up more than 40% year-on-year.
This means → the traditional supply-demand balance sheet has temporarily lost its pricing power. What is driving copper now is where the metal is moving and where U.S. tariff policy is headed.
In plain terms = there is no global shortage of copper — the U.S. is hoovering it up, and everyone else has to bid higher for what remains.
How much copper has the U.S. stockpiled in 18 months?
The COMEX-LME spread has been pulling copper into the U.S. steadily. JPMorgan estimates monthly U.S. imports of unrefined copper roughly doubled — from ~75,000 tonnes in 2024 to ~140,000 tonnes.
The U.S. accounts for only about 6% of global copper demand, but its import behaviour over the past 18 months resembles a country consuming roughly 9%.
JPMorgan's tally: ~870,000 tonnes of excess imports in 2025, another ~400,000 tonnes in the first five months of 2026 — a combined ~1.2 million tonnes of hidden inventory.
This means → if paired with protective tariffs and strategic-reserve policy, this copper could shift from ordinary commercial stock to state-level strategic inventory, permanently altering the global map of copper holdings.
Why is China being forced to pay more?
JPMorgan assumes 2026 Chinese refined-copper demand at ~15.9 million tonnes versus domestic supply of ~13.3 million tonnes — a net import gap of ~2.6 million tonnes. As long as China needs to import, it must outbid the U.S.
Price action confirms the dynamic: when copper hit ~$14,000/t, Chinese buying cooled; when it pulled back to ~$12,500/t, the arbitrage window reopened and imports surged.
This means → China's effective buying floor has risen by $2,000–3,000/t compared with historical norms, recently approaching ~$13,500/t.
In plain terms = China used to be copper's dominant price-setter — if China bid low, the world followed. Now the U.S. is also buying aggressively, and China cannot secure supply without paying up.
Two tariff scenarios — two very different copper paths?
JPMorgan identifies the execution form of Section 232 tariffs (a U.S. trade-protection tool targeting specific commodities) as H2's single most important variable.
Most bullish scenario: graduated tariffs — duties ratchet up over time, keeping the import-rush window open and tightening supply outside the U.S., pushing copper higher.
Most bearish scenario: one-shot tariff — a single full-rate levy shuts the arbitrage window immediately; U.S. excess inventory loses its accumulation driver and LME price support fades.
This reflects a structural shift in copper pricing: the metal increasingly behaves like a policy asset or strategic-reserve asset, not a pure industrial-cycle commodity.
Has the old copper playbook ended for good?
JPMorgan's summary: the old rule — "China sets the marginal price" — may be over.
The new regime is a tug-of-war between U.S. inventory policy and Chinese import demand, with two economic superpowers competing for a finite pool of overseas copper.
This means → the final shape of the Section 232 tariff will be the critical test of whether this new pricing framework holds.
In plain terms = reading copper used to mean watching Chinese factory orders; now you also have to watch what the White House signs.
Content is for reference only, not financial advice.