Copper prices are approaching record highs, driven by robust demand from artificial intelligence (AI) and electric vehicle (EV) sectors, particularly in the US and China. This surge in demand is compounded by substantial copper inflows into the United States, as traders and industrial users stockpile the metal ahead of potential tariffs on refined copper imports. Approximately 200,000 metric tons of copper arrived in the US in July 2026, marking the largest monthly inflow in over a decade. This aggressive accumulation has led to US copper reserves exceeding 1 million metric tons.
The influx into the US is primarily fueled by a significant arbitrage opportunity, where Comex copper in New York is trading at a premium of over $350 per metric ton compared to London Metal Exchange (LME) prices. This price difference is sufficient to cover shipping costs and generate a profit, diverting copper supplies from other global markets to US ports. As a result, inventories in LME warehouses outside the US have sharply declined, creating tightness in the global market and contributing to higher prices.
While refined copper is currently exempt from the 50% Section 232 tariffs applied to semi-finished copper products, the threat of future tariffs on raw metal, potentially starting at 15% in 2027 and rising to 30% in 2028, is a major driver of the stockpiling. This uncertainty has kept the Comex-LME spread elevated and distorted trade flows, despite the US administration deferring a formal decision on these tariffs multiple times. The strategic build-up of copper in the US is seen as a move to secure a critical material for key industries like power grids, AI infrastructure, and defense, but it also places US manufacturers at a disadvantage due to higher domestic copper costs.
