Copper prices fell on Tuesday as global supply continued to expand alongside rising stockpiles of the industrial metal in the United States.
Copper was officially added to the US government’s list of “critical minerals” deemed essential for economic and national security, according to a new report — a move underscoring the metal’s growing importance to modern industries spanning energy and technology.
Ironically, the US already holds the world’s second-largest copper inventory after China — without spending a single federal dollar to build it. Market forces alone created this reserve, driven by a wide arbitrage gap between prices on the US CME exchange and the London Metal Exchange (LME).
Price gap drives copper toward the US
The price differential between the two markets has attracted massive physical copper inflows into the US, a trend that continues as traders bet that the “critical mineral” designation — first floated in August — could eventually lead to import tariffs.
Arbitrage trade: from investigation to major price gap
When President Donald Trump ordered a national security review of copper imports in February, markets quickly priced in potential tariffs similar to those previously imposed on steel and aluminum.
By July, the gap between US and global copper prices had widened to roughly $3,000 per metric ton, creating a lucrative opportunity for major traders to ship as much copper as possible to the US for quick profit.
However, that premium collapsed later in July when the Trump administration surprised markets by imposing tariffs on semi-finished copper products while delaying a decision on refined copper duties until July 2026.
The gap returns
Still, arbitrage activity hasn’t ended. The spread has widened again, with the spot premium on the CME rising from under $100 per ton in August to more than $300, and the 10-month forward spread reaching around $800 per ton.
While smaller than July’s record levels, the gap remains sufficient to cover shipping costs, keeping incentives strong for traders to bring more copper into the US.
Massive CME inventories
This dynamic is reflected in surging copper inventories registered on the CME, which only allows delivery within the US.
Stocks have jumped from 83,900 tons in February to more than 335,000 tons today — meaning CME warehouses now hold more copper than the LME and Shanghai exchanges combined.
Deliveries continue daily into the American delivery network, particularly through the Port of New Orleans, as well as Baltimore, Salt Lake City, and Tucson.
“Economically trapped” copper in America
Benchmark Minerals Intelligence estimates that between 731,000 and 831,000 tons of copper in the US can be considered “economically trapped” — meaning it would take a sharp reversal in price spreads for this metal to leave the country.
With US premiums widening again, inventories are likely to keep rising rather than declining.
Trade data — delayed by the recent government shutdown — show that refined copper imports exceeded 1 million tons in the first seven months of the year, up roughly 400,000 tons from the same period last year.
Export data from top producers like Chile, Peru, and Australia also confirm strong flows toward the US.
The US becomes copper’s top destination
The United States has effectively become the world’s main destination for excess copper, enabling Germany’s Aurubis — Europe’s largest producer — to raise its 2026 delivery premium by 38% to a record $315 per ton above LME prices.
A strategic stockpile without official planning
Market dynamics have triggered a major redistribution of global copper inventories toward the US, where the metal is now effectively “locked in” by the same forces that brought it there.
Without any formal strategy, the US has effectively built what could be described as a “strategic copper reserve” — managed by private industry rather than the government.
This reserve continues to grow and will likely keep expanding as long as arbitrage opportunities persist, allowing traders to profit by buying copper abroad and shipping it to US ports.
China is believed to hold the world’s largest strategic copper stockpile, estimated at around 2 million tons — though exact figures remain a state secret.
The US has not reached that scale yet, but it is steadily moving toward a comparable reserve size.
The final irony: upcoming tariffs may reduce import dependence
The Trump administration is set to review US dependence on copper imports in July next year, with the potential to impose tariffs on refined copper starting in 2027.
Ironically, every ton of copper entering the country now reduces that very dependence — even before tariffs designed to promote domestic production take effect.
As of 15:10 GMT, December copper futures were down 0.5% at $5.07 per pound.
