Copper prices are approaching record highs, primarily driven by concerns over potential US import tariffs, which are significantly distorting the global copper market. This has led to a massive influx of the metal into US warehouses, with COMEX inventories surging to a record 675,185 metric tons after 46 consecutive days of inflows. This accumulation has happened as traders rush to ship metal into the US ahead of a potential 15% tariff on refined copper starting in January 2027, increasing to 30% in 2028.
Despite an anticipated global surplus of 639,000 tons for 2026, the market is now perceived as "balanced at best" or even facing a deficit due to copper being stockpiled in the US and effectively removed from global availability. This strategic warehousing has also led to substantial drawdowns from London Metal Exchange (LME) inventories, with 65,400 tons ordered for withdrawal recently, and LME inventories falling for four straight sessions to 234,275 tons. The CEO of Glencore, Gary Nagle, suggested that any tariff announcement, regardless of the duty percentage, could cause prices to fall by providing market clarity.
The US imported 885,000 tons of refined copper in the first half of 2026, a 3% increase from the previous year, and is on track to surpass 2025's record of 1.64 million tons. This heavy importing activity is contributing to the artificial tightness in the global market. Meanwhile, Chile, the world's largest copper producer, saw its output hit a 2011 low in July, producing 403,424 tons, a 9.4% decrease year-on-year, primarily due to storm damage and maintenance. This reduction in supply further exacerbates the perception of tightness in the market, pushing prices towards new records.
Three-month copper on the LME reached $14,343 per metric ton, just shy of its all-time record of $14,527.50. Comex copper for December delivery fell to $6.6020 a pound ($14,555 a metric ton) after hitting an all-time high of $6.7775 a pound in late August. While some analysts like Macquarie's Alice Fox anticipate a "massive spike" if tariffs are implemented, others believe that the market will eventually draw down the high stockpiles in the US, which are not expected to be re-exported, leading to a long-term absorption of the excess supply.
