Market Overview
Copper set fresh records this week before retreating sharply as doubts emerged over the US tariff plan that has distorted global inventories and pricing.
LME three-month copper broke January’s previous high on Monday, reached US$14,779/t on Tuesday and touched US$14,875/t early on Thursday. It then fell 3.1% to US$14,312/t after Reuters reported that the White House had yet to finalise its Section 232 decision on refined copper tariffs. COMEX October futures fell 4.2% to US$6.5355/lb, or about US$14,408/t, after trading above US$6.87/lb earlier in the week.
Despite the volatility, the LME cash settlement was broadly unchanged: US$14,390/t on Thursday versus US$14,371/t a week earlier. Copper remains up about 16% year to date and roughly 40% year on year.
Policy Takes Centre Stage
The proposed US tariff — reportedly 15% from January 2027, rising to 30% in 2028 — remains the market’s dominant near-term variable. The Commerce Department’s recommendation was due on 30 June, but a decision remains outstanding.
The policy dilemma is clear. The US imports about half of its refined copper requirements and has only two operating smelters. A tariff could support domestic mining and processing, but it would also raise costs for US manufacturers and add to inflation pressures ahead of the November midterm elections.
Thursday’s reversal showed how much of the recent rally has been tied to the tariff trade rather than an immediate change in underlying consumption.
Inventories and Physical Market
Anticipated tariffs have drawn exceptional volumes of copper into the United States. COMEX warehouse stocks rose to a record 696,259 tonnes this week, while LME inventories were near 235,000 tonnes and Shanghai Futures Exchange stocks fell to about 63,000 tonnes, their lowest level since January 2024.
The result is a highly uneven physical market: ample copper is held in the US, while visible inventories elsewhere remain constrained. The LME cash-to-three-month premium narrowed from its mid-August peak of US$436/t to US$41/t on Thursday and briefly moved into a discount.
If tariffs do not proceed, the large US inventory build could weigh on the market for an extended period. If they do proceed, reduced availability outside the US could intensify the physical squeeze.
Demand Signals Mixed
High prices are beginning to restrain Chinese buying. China imported 382,000 tonnes of unwrought copper in August, down from 425,000 tonnes in July and the weakest August result in six years. January–August imports of 3.3 million tonnes were 6.7% below the same period last year.
That caution reflects price sensitivity rather than a breakdown in the longer-term demand story. Grid investment, renewable generation, electric vehicles, data centres and electrification continue to provide a strong structural base for copper demand.
Chile’s August copper export revenue fell 14% month on month to US$4.62 billion as winter weather disrupted mine and port operations. Copper equities also sold off sharply after the tariff report, with Freeport-McMoRan down 8% and Southern Copper and Teck about 7% lower.
Supply Constraints Persist
This week highlighted the difference between short-term policy speculation and the longer-term supply outlook. The move to record prices was driven principally by tariff positioning and inventory relocation. The underlying support for copper, however, remains rooted in constrained mine supply.
Morgan Stanley expects global mine supply to be flat to slightly lower in 2026 — potentially the first annual decline since 2017. ICSG data showed mined output down 1.1% and concentrate output down 2.6% in the first half, with disruptions affecting major producing regions including Chile, Indonesia and the Democratic Republic of Congo.
Treatment and refining charges remain at or below zero, reflecting pressure on smelter economics. Major new supply additions from Grasberg, Kamoa-Kakula and Andes Norte are not expected to materially affect the market until 2028–29.
Market Outlook
The market is likely to remain volatile until the US tariff decision is resolved and next week’s Federal Reserve meeting provides further direction on rates and the dollar.
A decision to shelve tariffs could unwind part of the COMEX premium and expose copper to a pullback towards the US$13,600–14,100/t range. Conversely, tariffs could produce another sharp spike by further tightening availability outside the United States.
The medium-term outlook nevertheless remains constructive. Copper’s supply pipeline remains limited, grades are declining at mature operations and demand from electrification infrastructure continues to grow.
Organisation Outlook Key driver
Goldman Sachs US$13,735/t at end-2026; about US$13,800/t average in 2027 ....Lower mine supply; US stockpiling Morgan Stanley About 600,000t deficit in 2026...... Mine disruptions; tariff-related flows Wood Mackenzie US$13,200–13,800/t .....Supply disruption; electrification demand CRU At best, a balanced market outside US stocks US import pull; smelter cuts Citi US$15,000/t year-end; US$17,000/t .....upside case Supply constraints; AI and grid demand Trading Economics About US$14,640/t in Q3; US$15,960/t over 12 months.... Tariff front-loading; sulphur supply
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Sources
Reuters Commodities Desk, including White House copper tariff plan stalls amid affordability concerns, 10 September 2026; Bloomberg Commodities & Metals, 7–11 September 2026; Trading Economics; LME and COMEX market and warehouse data; ICSG; Goldman Sachs Research; Morgan Stanley Research; CRU; Wood Mackenzie; Citi; Macquarie; Jefferies; Saxo Bank; SP Angel; MINING.com; Australian Financial Review; Financial Times; and ICAA Copper Weekly Brief, Week Ending 4 September 2026.
