Copper traders are once again scouring the world for metal to send to the US, as renewed speculation about import tariffs revives a trade that’s upended the $300 billion-a-year market.
The on-off threat of import tariffs from President Donald Trump has dominated the copper market over the past year, often driving prices on New York’s Comex above global benchmarks and creating a massive opportunity for traders to profit by shipping metal to the US. In recent months, US copper imports had slowed after softer Comex prices made shipments unprofitable. But a pick-up in the spread between Comex and the London Metal Exchange in the past few weeks means that traders are now shipping every spare ton to the US, according to several executives, who predicted that imports could bounce back to historically elevated rates of 150,000 to 200,000 tons a month. Front-month Comex contracts have risen to more than $500 a ton above cash prices on the LME for the first time since last autumn. The outperformance is being driven by renewed investor enthusiasm for copper as well as speculation that the Trump administration will impose import tariffs on refined metal as part of its effort to protect US industry. The commerce secretary has a June 30 deadline to deliver an update on the US copper market that could pave the way for duties starting January 2027.
Trafigura last week moved to withdraw hundreds of millions of dollars of copper from LME warehouses, which was at least in part an attempt to capture premium prices on Comex, according to people familiar with the matter. The orders to withdraw were the largest the LME has seen since 2013. The renewed rush to ship to the US is adding to a bullish cocktail of factors that traders say could drive prices to fresh highs, after copper climbed to a record above $14,500 a ton in late-January. While the copper tariff trade is reviving, getting metal into the US is becoming harder. Shipping South American copper to major US ports is taking much longer than usual as disruptions tied to the Iran war ripple through global freight markets and intensify congestion at the Panama Canal.
“There’s a bit of déjà vu. We’re in the same situation as last year, where all tons are being directed to the US.”
Henry Van, head of industrial metals analysis at Trafigura Group
The mere threat of future duties is enough to sustain inflows, said Gerardo Tarricone, managing director of London-based Arion Investment Management Ltd. Copper is already trading at historically elevated levels. It reached as high as $13,746 a ton in London on Wednesday, up about 43% in the past year. Enthusiasm about artificial intelligence has helped lift investor positioning on Comex to the most bullish since December 2020. And buyers in China, which had stepped back from the market when prices rallied earlier this year, have returned since the Chinese New Year holiday.
Should Trump decide to impose tariffs on refined copper, the impact could be to squeeze supplies on the LME, traders said. That would be reinforced if the US follows through on the Commerce Department’s recommendation last year that a tariff of 15% should be imposed from January 2027. That could potentially open a window in the second half of the year when there would be a huge incentive for traders to ship copper to the US.
“The focal point of that deficit should move to the LME. It’s a matter of time.”
Nicholas Snowdon, chief metals economist at Mercuria Energy Group
Background
The copper market has been volatile due to geopolitical tensions and trade policies, with the US-China trade war previously impacting prices. The potential for new tariffs under the Trump administration could further strain global supply chains and affect market dynamics.
As the deadline for the US Commerce Department's update approaches, traders and investors will be closely monitoring developments. The potential imposition of tariffs could significantly alter global copper flows and pricing, making this a critical period for market participants.
