Copper Market Sees Unprecedented Concentration in US Warehouses Amid Tariff Risk

The global copper market is experiencing unprecedented concentration in U.S. warehouses, with close to 70% of reported copper held in COMEX warehouses, according to Saxo Bank's head of commodity strategy, Ole Hansen.

Hansen attributed the immediate driver of this trend to tariff risk, as well as strong demand from China due to its energy transition, despite a downturn in the housing market. The Commerce Department has recommended a phased duty on imported refined copper, with 15% in 2027 rising to 30% in 2028.

Copper for immediate delivery closed $535 per metric ton above the three-month contract on Monday, the widest gap since 2021, known as backwardation. Hansen doubted the scale of the shortage behind this trend, suggesting it could be driven by a relatively small amount of metal.