Copper prices declined during Friday trading as the U.S. dollar climbed against most major currencies, with investors engaging in profit-taking after the metal’s recent rally.
Trump’s announcement of a 50% tariff on copper imports pushed U.S. copper prices to record highs, but analysts expect those prices to gradually decline in the coming months as traders offload the large stockpiles they had accumulated in anticipation of the tariffs.
The tariff follows a U.S. Commerce Department investigation launched back in February, with early expectations suggesting a 25% duty. However, the mere anticipation led to stockpiling and pushed COMEX copper prices up 25% from January through this past Monday.
On Tuesday, Trump’s announcement sent COMEX copper to an all-time high of $5.6820 per pound — or $12,526 per metric ton — more than $2,920 above the benchmark price on the London Metal Exchange (LME), which stood around $9,600 per ton.
Expected Price Drop as U.S. Demand Slows
Tom Price, an analyst at Panmure Liberum, said: “Once the noise around Trump’s tariffs subsides, we expect U.S. copper prices to fall and converge with global prices, as domestic consumption will be delayed.”
Price noted that U.S. demand for copper is weak, forecasting a 16% drop this year to 1.32 million tons compared to last year. The decline in demand is partly due to uncertainty surrounding tariffs, which has slowed economic growth. Meanwhile, U.S. manufacturing data — a key sector for copper consumption — shows the industry remains in contraction.
Copper Stockpile Surplus in the U.S.
According to Macquarie’s analysis using trade data from January to May and shipping data from June, U.S. copper imports reached around 881,000 metric tons in the first half of the year, while actual demand stood at just 441,000 tons.
This indicates a surplus of 440,000 tons — 107,000 tons in visible COMEX inventories and another 333,000 tons in unreported stockpiles or pre-purchased material embedded in industrial supply chains.
Rising U.S. Inventories vs. Falling London Stocks
A large portion of this surplus has been stored in COMEX warehouses, where copper inventories reached 221,788 short tons (equivalent to 201,203 metric tons) as of July 7 — a surge of over 127,000 short tons, or 135%, since late March when global shipments began arriving at U.S. ports.
In contrast, inventories at the London Metal Exchange have dropped by 66% since mid-February, falling to around 90,000 metric tons by late June — the lowest since August 2023.
Some of the U.S. stockpiles are stored in free trade zones, meaning they haven’t officially entered through customs and can be re-exported more easily. However, copper held in COMEX warehouses under duty-paid status would be more complex — though not impossible — to re-export.
Duncan Hobbs, head of research at Concord Resources, said: “There’s nothing preventing the re-export of copper that’s cleared customs… but it would require a financial incentive, like a drop in the COMEX premium.”
Uncertainty Over Tariff Exemptions Could Weigh on Prices
Another factor that may weaken U.S. copper prices is the potential for certain countries to be exempted from the tariffs, which could erode the COMEX premium, according to industry sources.
Chile is considered a strong candidate for exemption, having accounted for 70% of U.S. copper imports in 2023 — around 646,000 metric tons, according to Trade Data Monitor. The U.S. also maintains a trade surplus with Chile, which could make a political case for exemption.
Citi analysts, including Tom Mulqueen, expect that countries like Canada, Chile, and Mexico may ultimately face a reduced tariff of 25%, as they are deemed “key partners.”
Challenges for Traders Sitting on Expensive Copper
For now, traders who rushed to front-run the tariffs find themselves holding some of the world’s most expensive copper — which may be hard to sell unless the U.S. market maintains its current premium.
On the other hand, the U.S. Dollar Index rose by 0.2% to 97.8 at 16:07 GMT, reaching a high of 97.9 and a low of 97.5.
As for copper trading, September futures were up 0.9% at $5.54 per pound as of 15:55 GMT.
