Copper is poised for a monthly gain, driven by a tightening global supply outlook, although recent tariff decisions in the US have introduced significant volatility. LME copper's speculative net long positions increased by 12,668 lots to 60,771 lots in the week ending July 24, indicating improved sentiment spurred by tight supply and low inventories. This is in contrast to more modest increases in other base metals like aluminum (up 96 lots to 59,264 lots) and zinc (up 4,107 lots to 39,736 lots).
The US copper market experienced a significant upheaval following President Trump's July 30 announcement of a 50% tariff on semi-finished copper products, unexpectedly excluding raw copper. This decision caused COMEX copper futures to plummet over 20% in one day, marking the largest intraday drop since 1988, and eradicating the substantial US price premium which had reached as high as 28% compared to the London Metal Exchange. The COMEX-LME spread collapsed from $2,704 per metric ton on July 29 to just $29 per metric ton in morning trading on July 31.
Ahead of the tariff announcement, traders had aggressively shipped refined copper to the US, anticipating broad tariffs that would include raw materials. This led to COMEX stockpiles surging 170% to 253,431 short tons, their highest level in 21 years, while LME inventories dropped approximately 50% this year. The tariff exclusion of raw copper has created an oversupply in the US and ended a lucrative arbitrage trade, leaving many traders with "underwater" positions. The LME spot copper price stood at $9,651.70 per metric ton on July 30.
Despite the immediate disruption, the long-term outlook for tightening global supply continues to support higher copper prices outside the US. The tariff on specific semi-finished products, totaling $12.56 billion in 2024 import value, primarily affects items like insulated electric conductors ($7.37 billion). The Trump administration has also mandated that a quarter of US high-quality copper scrap be sold domestically, rising to 40% of copper inputs by 2029, though analysts believe current domestic industrial practices already meet these requirements. The administration left open the possibility for further tariffs after a review by June 30, 2026.
