Copper prices experienced a sharp decline, falling more than 3% on Thursday after reaching a record high of $14,875 per tonne on the London Metal Exchange earlier in the session [1]. The drop followed a Reuters report indicating that a US decision on imposing tariffs on refined copper is still pending, which challenged market expectations that such tariffs were imminent and led to a reduction in the tariff premium previously priced into copper [1].
According to ING’s Commodities Strategist Ewa Manthey, the market had largely assumed that tariffs would proceed, but the latest news has caused some of the tariff-driven price premium to dissipate [1]. The narrowing of the tariff premium between New York and London could make shipping copper to the US less attractive, potentially resulting in some inventory returning to international markets [1].
Despite the recent price volatility, the refined copper market is not currently facing a shortage. Refined production increased by 2.4% in the first half of the year, resulting in a preliminary surplus of approximately 131,000 tonnes, according to data from the International Copper Study Group (ICSG) [1]. Manthey notes that the arbitrage opportunity will eventually close: if tariffs are not implemented, the US premium should narrow and metal could flow back to global markets; if tariffs are imposed, imports may rise before duties take effect but are expected to slow afterward [1].
While the long-term outlook for copper remains positive, near-term prices are expected to remain sensitive to further tariff-related headlines and developments [1].
CONCLUSION
Copper prices have become highly sensitive to US tariff news, with the latest uncertainty causing a significant price drop. Although the refined market is currently in surplus, near-term volatility is likely to persist until a clear US tariff decision is made.