Copper prices have surged, with London Metal Exchange (LME) copper reaching its highest level in two months, topping $14,000 a ton and nearing its January record of $14,500. Futures saw a second consecutive daily gain on Tuesday, building on a 3.1% increase last month. In New York, Comex copper gained as much as 2.3%, pushing the price near $6.682, while US copper futures climbed to approximately $6.90 per pound, a record high. The LME market has shifted into backwardation, with cash copper trading at a premium of more than $100 over three-month metal, the widest since January, and New York prices are trading about $640 a tonne above London, compared to an average premium of over $350 in July.
The primary driver of this rally is a significant increase in US stockpiles, with over 200,000 tonnes of copper arriving at US ports in July, the largest monthly inflow since IHS Markit began records in 2014. Comex inventories are up over 40% this year, and total US copper hoard, including private storage, is estimated to be well above 1 million tonnes. This surge is largely attributed to traders hoarding copper ahead of an anticipated decision on import tariffs by President Donald Trump. Michael Cuoco, head of metals at StoneX Financial, noted that "the tariff arbitrage is ruling the roost over demand growth."
Washington's copper tariff decision is now over a month overdue, with Commerce Secretary Howard Lutnick's June 30 deadline to recommend phased duties having passed without an announcement. The administration is considering extending existing 20% tariffs on semi-finished products to raw metal and has sought comments on adding 14 more product categories, including electric conductor cables, to its Section 232 duties. Despite uncertainty, the influx of copper to the US has accelerated.
The rally is also supported by broader market optimism stemming from hopes of a reopening of the Strait of Hormuz, with the US, Iran, and Oman preparing a 60-day shipping arrangement. This potential de-escalation has softened inflation fears and led traders to pare bets on Federal Reserve rate hikes, providing a tailwind for growth-sensitive metals like copper. Copper equities have also benefited, with Glencore reporting an 86% jump in adjusted EBITDA to $10.1 billion and a 15% rise in copper output. Freeport-McMoRan gained 3.3%, and First Quantum Minerals 3%.
