Copper prices have surged above $14,000 per tonne, approaching record highs, as traders accelerate shipments into the United States ahead of a potential import tariff decision, resulting in tighter physical markets and a significant drawdown in London Metal Exchange (LME) inventories [1]. According to ING Commodities Strategist Ewa Manthey, US copper imports exceeded 200,000 tonnes in July alone, marking the highest monthly level in at least 12 years and pushing COMEX inventories to a record high [1].
The London copper market is exhibiting increasing signs of tightness, with LME inventories falling to a five-month low and the cash-to-three-month spread widening to around $120 per tonne in backwardation, up from about $40 a week ago and the widest since October. This points to a squeeze on short-term supplies [1]. Mine supply growth remains constrained, and low treatment charges indicate tight concentrate availability. Demand continues to be supported by electrification, power grid investment, and AI infrastructure, with ING expecting the global refined copper market to record a deficit of around 35,000 tonnes in 2026 [1].
Much of the recent rally in copper prices is attributed to expectations that tariffs will be implemented broadly as anticipated. However, Manthey warns that if the final measures are delayed, narrower than expected, or exempt refined copper, part of the recent rally could unwind. In such a scenario, stockpiling into the US would slow, inventory flows would begin to normalize, and some of the current tightness outside the US would ease. Any correction could be amplified if investors unwind positions built on tariff expectations [1].
CONCLUSION
Copper's rally is being driven by tariff expectations, tight supply, and robust demand, but faces significant policy risk. Any disappointment or change in tariff implementation could trigger a sharp correction, underscoring the market's sensitivity to policy developments.