Tariff Threats Turn Copper Market Surplus Into Tight Balance as LME Copper Prices Approach Record Highs
Nashnova编辑部
LME three-month copper hit $14,343 per tonne on August 25, just 1.3% below the all-time high; the rally is driven not by a global shortage but by tariff-driven arbitrage draining inventories outside the U.S. and reshaping a surplus market into a tight balance.
Why is copper suddenly near its all-time high?
LME three-month copper touched $14,343 per tonne on August 25 — just a step from the record $14,527.50.
This means → the driver is not "the world is running out of copper." It is a geographic relocation: traders betting on incoming U.S. copper tariffs are shipping metal into America to lock in the price gap.
In plain terms = global copper supply hasn't shrunk, but copper is being moved en masse into U.S. warehouses, leaving everywhere else increasingly tight.
What is the inventory data telling us?
LME warehouses recently received 65,400 tonnes of cancelled warrants — delivery orders signalling that copper is about to be pulled out — cutting available stock to roughly 90,000 tonnes.
The cash-to-three-month premium (how much more spot copper costs than the futures contract) climbed to its highest since 2021. This reflects intense near-term demand for physical metal.
Meanwhile, COMEX copper inventories have risen for 46 straight trading days to a record 675,185 tonnes. In plain terms = one warehouse is being emptied while the other is being stuffed — the two are moving in opposite directions.
How did a "surplus" become a "tight balance"?
CRU chief copper analyst Robert Edwards said the tariff threat has turned what should be a surplus into "a balanced market at best." CRU had forecast a 639,000-tonne global copper surplus for 2026.
This means → the call rests on one key assumption: copper stockpiled in the U.S. is no longer available to the rest of the world. Once that metal is locked inside American borders, the supply picture elsewhere flips from "plenty" to "just enough" — or worse.
In the first half of 2026 the U.S. imported roughly 885,000 tonnes of refined copper cathode, more than double the same period in 2024. Full-year 2025 imports already set a record at 1.64 million tonnes.
What is the tariff timeline — and why does uncertainty matter most?
The U.S. Commerce Department is due to submit a copper-market report to the White House by June 30, 2026, informing a presidential decision on whether to impose a 15% copper import tariff from January 1, 2027, rising to 30% in 2028.
Refined copper received a tariff exemption last year; prices dropped sharply on the news. This reflects the market pricing tariff risk in both directions — the prospect of duties lifts prices, while an exemption instantly relieves pressure.
Macquarie strategist Alice Fox noted that at current COMEX inventory levels, "it would take years to work through this metal." She said prices would "spike significantly" if tariffs proceed, yet Macquarie's overall view sees more downside risk for copper.
Why does Glencore say clarity could actually push prices down?
Glencore CEO Gary Nagle argued that whether the announced rate is zero, 15%, or 30%, any definitive policy statement could send copper prices lower — because once uncertainty is removed, the arbitrage incentive fades.
He noted that copper sitting in COMEX warehouses has already had tariffs pre-paid; factoring in re-export costs, this metal will stay in the U.S. and be consumed domestically rather than shipped back out. This means → supply outside the U.S. will remain tight even after tariffs are settled.
In plain terms = the copper has gone in but it can't come out — resolving the tariff question may ease prices short-term, but the distortion in global supply is already baked in.
Can copper still break the record?
Amelia Fu, head of international commodity strategy at Bank of China, pointed to low inventories, mine disruptions, and the shutdown of Indonesia's Gresik smelter as three forces tightening supply simultaneously. She said "copper could set a new all-time high within weeks or months."
China, the world's largest copper smelter, cannot export spare capacity to fill the gap because domestic demand is too strong. This means → the old safety valve — "China smelts a bit more to cover the shortfall" — is not available this time.
Whether copper breaks its record ultimately hinges on the timing and scale of U.S. tariff policy — the single biggest source of uncertainty hanging over the market right now.
Content is for reference only, not financial advice.