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 shift in global inventories, with traders rushing to ship copper to the US before any tariffs are imposed. Until recently, copper futures in New York traded at premiums over the London Metal Exchange (LME) benchmark, allowing traders to profit from the arbitrage. This activity has depleted inventories outside the US, pushing LME prices to a record near $15,000 a metric ton last month.
As midterm elections approach, investors are questioning whether a strong Democratic performance could disrupt Trump’s trade agenda or even prompt him to escalate tariffs. Analysts at Natixis warn that the market may have developed 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 surge to $18,000 if tariffs are delayed, allowing more copper to be shipped to the US.
Copper traders have been caught off guard by Trump’s tariff decisions before. In July last year, he imposed a 50% levy on downstream copper products while leaving commodity-grade copper untouched, catching many traders by surprise.