Copper Slides 3% From Record After Tariff Doubts
Copper prices retreated from a fresh high of $14,875 per tonne on the London Metal Exchange. The drop followed reports that the US has not yet decided on refined copper tariffs.
Copper lost more than 3 percent of its value on Thursday. The metal had reached a record $14,875 per tonne on the London Metal Exchange earlier in the session. This sharp reversal occurred after Reuters reported that the White House has not finalized a decision on tariffs for refined copper. Officials are currently weighing the benefits of domestic production against the potential cost increases for US manufacturers.
Market participants had largely priced in the assumption that tariffs would be implemented. The latest news challenged that consensus and removed a portion of the tariff premium from copper prices. According to GN markets/commodities (en-US), this event highlights how speculative expectations have pushed prices ahead of current supply and demand fundamentals.
US Stockpiles Reach Record Levels
Refined copper was excluded from the 50 percent tariffs imposed last year on semi-finished products. The Commerce Department was scheduled to advise the president by the end of June on a proposed 15 percent tariff starting in January 2027. No official decision has been announced to date. The anticipated duties drove COMEX prices above London levels, creating a profitable window for imports into the United States.
July inflows to US warehouses exceeded 220,000 tonnes, marking a monthly record. By early September, COMEX inventories reached approximately 680,000 metric tonnes. This volume is roughly eight times the levels recorded at the start of 2025. Estimates suggest total US holdings now surpass one million tonnes when including metal outside the exchange system.
Supply Deficit Remains Limited
Long-term fundamentals for copper remain supportive. ICSG data indicate that mined output fell 1.1 percent year-on-year in the first half of the year. Without a stronger recovery in the second half, this would mark the first annual contraction in mine supply since 2017. Falling ore grades and lengthy project development timelines continue to constrain the supply side.
However, the refined market is not currently facing an outright shortage. Refined production increased by 2.4 percent in the first half. This resulted in a preliminary surplus of approximately 131,000 tonnes, according to ICSG. LME inventories have stabilized this month, and pressure at the front of the curve has eased. Backwardation has narrowed significantly from its August peak, suggesting that the move toward $15,000 per tonne had outrun immediate physical realities.
Tariff Decision Drives Future Flows
The arbitrage between New York and London will eventually close regardless of the final policy choice. If tariffs are ruled out, the US premium should narrow. Some metal could return to international markets, increasing global availability. If tariffs proceed, imports may rise before the duties take effect but should slow down afterwards. The long-term outlook remains positive, yet prices stay vulnerable to shifts in tariff expectations.
