Copper Prices Plummet on Tariff Expectations and Inflation
International copper prices have experienced a sharp pullback since September 10, following an all-time intraday high of $15,197 per tonne on COMEX futures and a record high of $14,875 per tonne on LME three-month copper futures. The price spread between COMEX copper and LME copper narrowed by approximately 92%, from $783 per tonne on August 25 to $62 per tonne on September 15.
The pullback was driven by a combination of factors, including the easing of market expectations for tariffs on refined copper, which had previously supported the premium on COMEX copper futures. Rising inflation in the United States also exerted downward pressure on commodity prices, with the U.S. Producer Price Index (PPI) rising 5.4% year-on-year in August and the U.S. core Consumer Price Index (CPI) increasing by 0.3% month-on-month in August.
The shift in demand expectations, particularly regarding industrial demand driven by data center construction, also contributed to the pullback in COMEX copper futures prices. Market positioning played a role as well, with net long non-commercial positions in COMEX copper futures rising to a high level exceeding 90,000 contracts, indicating a concentration of speculative long positions.