Tariff Uncertainty Puts Brakes on Copper Rally
Copper prices have plunged by over 3% since hitting a record high of $14,875 per tonne on the London Metal Exchange. The sudden drop comes after Reuters reported that the White House has yet to decide whether to impose tariffs on refined copper. Officials are weighing the benefits of domestic production against potential higher costs for US manufacturers.
Until now, the market had largely assumed that tariffs would be implemented, driving up prices due to a tariff premium. However, the latest news has challenged this view and reduced the tariff premium in copper prices.
Copper inventory levels have shifted significantly to the US, with COMEX warehouses holding around 680,000 metric tonnes by early September. This is roughly eight times the volume recorded at the beginning of 2025. The tariff premium between New York and London has driven shipping more metal to the US, but this may become less attractive if the price gap narrows.
Copper's longer-term fundamentals remain supportive, with mined output down 1.1% year-on-year in the first half. Falling ore grades and long project development times will continue to constrain supply, while demand from power grids, electric vehicles, and data centres remains strong.