Copper prices declined on Monday as the U.S. dollar edged higher against most major currencies and markets tracked developments in global trade tensions.
Trump’s announcement of a 50% tariff on copper imports pushed U.S. copper prices to record highs, but analysts expect prices to gradually retreat in the coming months as traders offload the large stockpiles they had built in anticipation of the new duties.
The tariff follows a U.S. Commerce Department investigation launched in February, which had been expected to result in a 25% duty. However, even the anticipation of the move prompted a stockpiling surge, with copper prices on the COMEX exchange rising 25% from January through last Monday.
Following Trump’s announcement on Tuesday, COMEX prices soared to an all-time high of $5.6820 per pound, or $12,526 per metric ton — over $2,920 more than the benchmark London Metal Exchange (LME) price of around $9,600 per ton.
Expected Price Decline as U.S. Demand Slows
Tom Price, analyst at Panmure Liberum, stated: “Once the noise around Trump’s tariffs subsides, we expect U.S. copper prices to decline and converge with global prices, as American consumption is likely to be deferred.”
He noted that U.S. copper demand is weak, forecasting a 16% drop this year to 1.32 million tons from last year.
Part of the decline stems from tariff-related uncertainty, which has slowed economic growth. U.S. manufacturing data — from a sector heavily reliant on copper — shows the industry remains in contraction.
U.S. Copper Stockpiles Show Major Surplus
According to analysis by Macquarie, using trade data from January to May and June shipping figures, U.S. copper imports totaled around 881,000 metric tons in the first half of the year, while actual demand amounted to only 441,000 tons.
This leaves a surplus of 440,000 tons, split between 107,000 tons in visible COMEX storage and 333,000 tons in unreported inventories or pre-purchased stock held in industrial supply chains.
U.S. Inventories Rise While London’s Shrink
A large share of the surplus has been stored in COMEX warehouses, where copper inventories reached 221,788 short tons (about 201,203 metric tons) as of July 7 — up more than 127,000 short tons, or 135%, since late March when global shipments began arriving at U.S. ports.
Meanwhile, LME copper inventories have fallen 66% since mid-February, dropping to about 90,000 metric tons by late June — their lowest level since August 2023.
Some of the U.S. stock is held in free trade zones, meaning it has not yet cleared customs and can be more easily re-exported.
Copper stored in duty-paid COMEX warehouses would face more hurdles for re-export, but it’s still possible. Duncan Hobbs, research director at Concord Resources, said: “There’s nothing stopping re-exported, customs-cleared copper… but it would require a financial incentive, such as a drop in the COMEX premium.”
Tariff Exemptions Add to Uncertainty
Another factor that could weigh on U.S. copper prices is the possibility of exemptions for certain countries. This could erode the COMEX premium, according to industry sources.
Chile is a strong candidate for exemption, accounting for 70% of U.S. copper imports in 2023 — about 646,000 metric tons, per Trade Data Monitor. The U.S. also has a trade surplus with Chile, making a political exemption more feasible.
Citi analysts, including Tom Mulqueen, expect countries like Canada, Chile, and Mexico to eventually face a reduced tariff of just 25%, as “core partners.”
Traders Face Hurdles Offloading Stockpiled Copper
For now, traders who rushed to get ahead of the tariffs are left holding some of the most expensive copper in the world — which may be hard to sell unless U.S. market premiums persist.
Elsewhere, the U.S. dollar index rose 0.1% to 97.9 at 16:09 GMT, reaching a high of 98.1 and a low of 97.7.
As for trading, September copper futures were up 1.2% at $5.53 per pound at 16:04 GMT.
