US Copper Premium Falls as Tariff Plans Stall
The spread between US and London copper prices reversed sharply after reports that Washington would not impose import duties.
The premium for US copper imports collapsed on Thursday. The front-month COMEX-LME spread turned negative at times. It last traded at minus $20 per ton. This reversal makes shipments to the United States uneconomic. Reuters reported that the White House has stalled its plan to impose a 15% tariff on copper imports. The administration fears the measure would raise manufacturing costs. These costs could offset the benefits of encouraging domestic mining.
Benchmark copper on the LME fell 3% to $14,329.50 per ton. The price had earlier hit a record high of $14,875. COMEX copper prices dropped 4.7% to $6.49 per pound. This equals $14,308 per ton. The market had been pricing in a potential tariff since February 2025. Traders shipped metal to the US to avoid future costs. The sudden drop in the spread reflects the removal of that expectation.
Inventories Reach Record Highs
US copper stocks have risen for 57 consecutive days. Total inventories in COMEX warehouses reached 767,495 short tons. This volume equals 696,259 metric tons. It is a record high. Much of this metal came from London Metal Exchange registered warehouses. Macquarie estimates it would take years to consume this amount domestically. The rapid build in inventories is a direct result of tariff uncertainty.
George Griffiths, head of markets at AMT Futures, noted the distortions created by this uncertainty. He stated that the US administration is aware of these market shifts. The pass-through to inflation is a significant concern. Crude oil prices are near $100 per barrel. This adds pressure on the administration to avoid measures that raise input costs. The recent price action forces a confrontation with these economic realities.
Forward Premiums Narrow Sharply
The backwardation for nearby copper contracts also narrowed. The premium for cash over the three-month forward fell to $5 per ton. This is down from $41 per ton on Wednesday. The shift indicates a reduced expectation of future scarcity in the US. The market is adjusting to the possibility of a tariff-free environment. This change impacts hedging strategies for producers and consumers.
The data from GN auto markets/commodities: copper prices highlights the sensitivity of the market to policy signals. The rapid reversal of the spread demonstrates the speed of trader response. Physical flows that were previously locked in for the US are now in question. The global supply chain faces a potential reallocation. Producers must now assess their logistics and inventory levels without the tariff buffer. The situation remains fluid as the administration weighs its options.
