Tariff Rejection Could Spark Copper Buying Opportunity

Copper prices may be in for a surprise if the tariff rejection materializes. Despite the reported surplus, the market is still grappling with the aftermath of tariff-driven distortions.

The International Copper Study Group (ICSG) has revised its forecast from a 150 kt deficit to a 96 kt surplus for 2026. However, this surplus is largely nominal and does not accurately reflect the underlying dynamics of the market.

A closer look at the data reveals that downstream buying has been suppressed due to high prices, leading to implied off-exchange inventories falling below COVID-era levels. This suggests that consumers are no longer able to wait out high prices and may be willing to pay up for copper.

In June, dip buying above $6.00/lb produced a 60 kt deficit, erasing much of H1's apparent surplus. Miners sold off harder than copper on the September 10 tariff stall (COPX -9.1% vs. LME -1.8%), indicating that a tariff decision could create a buying opportunity.