Analysis-US tariff threat upends copper surplus as prices test all-time peak

By Tom Daly

Aug 25 (Reuters) - The prospect of U.S. ‌import tariffs could push copper ​prices to record ​highs even though there is no global shortage of the metal, analysts say, as the incentive to ship to the United States drains inventories elsewhere.

Three-month copper on the London Metal Exchange rose to as high as $14,343 per metric ton on Tuesday, within ‌striking distance of the $14,527.50 record, after orders to withdraw 65,400 tons of metal from LME warehouses in recent days.

The ⁠large-scale orders - known as warrant cancellations - came after last week's increase in available material on the LME and the Shanghai Futures Exchange appeared to ease concerns about tight supplies.

Analysts said the ‌rally reflects a shortage of copper available ‌outside the U.S. rather than a global deficit of the metal, which is critical for power grids, electric vehicles and AI datacentres.

Higher U.S. prices have encouraged traders to ship metal into COMEX warehouses ahead of a potential tariff on refined copper from 2027, running down inventories elsewhere and ​leaving what was expected to be a surplus market looking far tighter in practice.

TARIFF THREAT RESHAPES MARKET

The threat of tariffs has turned what should have been a surplus this year into "at best a balanced market", assuming copper stockpiled in the U.S. is no longer available, said Robert Edwards, ⁠principal copper analyst at CRU.

COMEX inventories have now risen for 46 straight days to a record 675,185 metric tons through an arbitrage trade that capitalises on higher COMEX prices. CRU last projected a ​639,000 ton global copper surplus for 2026.

"If (U.S.) imports keep coming in as they have been, then it's going to look like a deficit market in reality," Edwards said.

The U.S. imported almost 885,000 tons of refined copper cathodes ​in the first half of 2026, some 3% more than in the same period ‌last year, when a similar tariff threat hung over the market, and more than double imports in the first six months of 2024.

The U.S. imported a record 1.64 million tons in the full year of 2025.

Refined copper was ultimately ⁠given an exemption from the tariffs last year, which initially sent prices plummeting.

But the U.S. Commerce Department was due to report to the White House on copper markets by June 30 this year, so that President Donald Trump could decide whether to go ahead with a 15% tariff from January 1, 2027, rising to 30% from 2028.

"Based ⁠on our numbers, you're looking at years for that metal to get consumed," said Macquarie strategist Alice Fox, referring to COMEX copper stocks. While Macquarie sees greater downside ​risks for copper, prices would "massively spike" if Trump proceeds with a tariff, she added.

GLENCORE SAYS UNCERTAINTY, NOT TARIFFS, IS DRIVING RALLY

The CEO of miner and trader Glencore, however, believes any announcement on tariffs - whether imposing a zero, 15% or 30% duty - is likely to see prices fall because the market will finally have better clarity on the ‌situation.

"You'll have these high stockpiles in the U.S., which over time will be drawn down for use ... not to be exported again" due to the costs involved, Gary Nagle said on an earnings call. Copper stored in ‌COMEX warehouses is already duty-paid.

If those inventories stay in the United States, other regions would continue to face tighter supplies. China, the world's largest copper-smelting nation, has limited capacity ⁠to offset shortages elsewhere because of strong domestic demand, ‌according to Amelia Fu, head of commodities market ​strategy at Bank of China International.

Low stocks, mine disruption and an outage at the Gresik smelter in Indonesia are tightening the market, Fu said. "We could see new record highs in copper prices in coming weeks or months."

(Reporting by Tom Daly, Editing ‌by Louise Heavens)

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