KEY POINTS
- US copper premium drops as tariff plans stall.
- COMEX inventories hit a record 696,259 tonnes.
- LME copper falls 3% after hitting a record high.
The premium on copper shipped to the United States fell sharply on Thursday after a Reuters report indicated that Washington’s plan to impose tariffs on imported copper has stalled.
The development triggered a rapid reversal in the US copper market, where prices had traded significantly above international benchmarks for months as traders rushed to move metal into the country ahead of a possible tariff.
Benchmark three-month copper on the London Metal Exchange fell 3% to $14,329.50 per metric ton by 11:20 GMT, after earlier reaching a record $14,875 per ton.
Copper futures on the US COMEX exchange fell even more sharply, dropping 4.7% to $6.49 per pound, equivalent to about $14,308 per ton.
The decline came as markets reassessed the likelihood of a new US tariff and the extent to which manufacturers would bear the additional costs.
Tariff uncertainty drives market reversal
The United States has been preparing for possible tariffs on copper imports as part of efforts to encourage domestic production and reduce reliance on foreign supplies.
Traders and producers began increasing shipments of copper to the US in February 2025 after President Donald Trump ordered an investigation into the possibility of imposing import tariffs.
Markets had been particularly focused on the prospect of a 15% tariff from the beginning of 2027. The expectation encouraged traders to build inventories in the US, pushing COMEX prices well above LME prices and making shipments to the country highly attractive.
However, the reported delay in the tariff plan has sharply reduced that incentive.
One copper trader said the market had become excessively long, meaning traders had accumulated large positions and supplies based on expectations of continued US demand and a tariff-driven price premium.
The rush to move copper into the US has resulted in a dramatic increase in stocks held in COMEX warehouses.
Copper inventories in US COMEX warehouses have risen for 57 consecutive days, reaching a record 767,495 short tons, equivalent to about 696,259 metric tons.
Macquarie estimates that consuming such a large stockpile through domestic demand could take years.
A significant portion of the copper accumulated in the United States has been transferred from warehouses registered with the London Metal Exchange.
