Copper prices have soared since Donald Trump's return to the White House, driven by fears of potential tariffs on the metal. This surge has led to a significant reshuffling of global inventories, with traders betting on levies that haven't yet materialized. Until recently, copper futures in New York traded at persistent premiums over the London Metal Exchange benchmark, allowing traders to profit from shipping copper to the US ahead of any tariffs. This activity has depleted inventories outside the US and pushed LME prices to a record near $15,000 a metric ton last month.
As midterm elections approach, investors are questioning whether a strong Democratic showing could disrupt Trump's trade agenda or prompt him to escalate tariffs. Analysts at Natixis warn that the market may be in a bubble that could burst if tariffs are ruled out. Macquarie Group predicts prices could plummet to $10,000 a ton in that scenario or rally to $18,000 if tariffs are announced with a delay, allowing more copper to be shipped to the US.
Copper traders have been caught off guard by Trump's tariff decisions before. Last July, he imposed 50% levies on downstream copper products while leaving commodity-grade copper untouched, catching many traders by surprise.