Copper Nears Record High as US Tariff Threat Distorts Global Supply

Copper prices surged toward all-time highs this week, driven not by a global production deficit but by the looming threat of U.S. import tariffs that are pulling metal into American warehouses and creating scarcity elsewhere. This market distortion is upending supply-demand forecasts and fueling a rally that analysts believe could test new records.

Inventory Shifts Signal Market Dislocation

The price action reflects a tale of two markets. On the London Metal Exchange, three-month copper rose to $14,343 per metric ton on Tuesday, just shy of its $14,527.50 record. The move was spurred by large-scale orders to withdraw 65,400 tons of metal from LME-registered warehouses in recent days, a development known as warrant cancellations that signals tightening availability.

In stark contrast, U.S. inventories are swelling. According to Reuters, inventories in COMEX warehouses have risen for 46 consecutive days to a record 675,185 metric tons. This buildup is the result of an arbitrage trade, where traders capitalize on higher U.S. prices to ship metal into the country ahead of a potential tariff decision.

Tariff Threat Turns Surplus into Scarcity

The market is bracing for a White House decision on whether to impose a 15% tariff on refined copper starting January 1, 2027, which would rise to 30% in 2028. This has incentivized a massive flow of copper into the U.S., which imported a record 1.64 million tons in 2025 and nearly 885,000 tons in the first half of 2026, according to the report.

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This stockpiling is effectively removing a large volume of copper from global circulation. Robert Edwards, principal copper analyst at CRU, told Reuters that the trend has turned what his firm projected to be a 639,000-ton global surplus for 2026 into "at best a balanced market." He added, "If (U.S.) imports keep coming in as they have been, then it’s going to look like a deficit market in reality."

Diverging Outlooks from Industry Experts

Analysts are divided on the future path of prices. Macquarie strategist Alice Fox noted that prices could "massively spike" if the Trump administration proceeds with the tariffs. The copper currently stored in COMEX warehouses is duty-paid, and if it remains within the U.S., it would prolong the tighter supply conditions for other regions.

However, Gary Nagle, CEO of miner and trader Glencore, offered a counterpoint on a recent earnings call. He suggested that any definitive announcement on tariffs—whether they are implemented or not—would bring clarity to the market and likely cause prices to fall as the high U.S. stockpiles are gradually consumed domestically.

Amelia Fu, head of commodities market strategy at Bank of China International, told Reuters that other bullish factors are also at play, including low global stocks, mine disruptions, and a smelter outage in Indonesia. "We could see new record highs in copper prices in coming weeks or months," Fu said.