Copper Prices Pull Back Amid Easing Tariff Expectations and High Inflation
The international copper market has experienced a significant correction in recent days, following a sharp pullback from all-time highs reached on September 9. COMEX copper futures had climbed to an intraday high of 689.4 cents per pound, while LME three-month copper futures briefly touched $14,875 per tonne.
The market's downturn is attributed to several factors, including the easing of expectations regarding potential tariffs on refined copper imports into the US. The initial anticipation of such tariffs had led to a cross-market arbitrage mechanism, where market participants would buy LME copper, take delivery outside the US, and then sell it as COMEX copper futures.
Additionally, high inflation in the US has exerted downward pressure on commodity prices, including those of COMEX copper. The US Producer Price Index (PPI) for August rose 5.4% year-on-year, while the US Core Consumer Price Index (CPI) for August exceeded market expectations.
Despite the recent pullback, medium- to long-term factors supporting copper prices remain in place. Supply constraints, including low copper concentrate treatment charges and tight visible inventories outside the US, will continue to provide support for copper prices.