US Copper Tariff Trade Loses Momentum as Deadline Passes Without Announcement

The US copper tariff trade is losing momentum as the mid-September deadline passed without an announcement. While markets had anticipated the possible implementation of a 15% tariff on refined copper imports in 2027, rising to 30% in 2028, the absence of a decision does not necessarily mean that tariffs are off the table.

The policy risk remains, and if the White House leaves the phased tariff schedule intact, it could continue drawing global copper into the US through 2027. Traders might then move cathode into US exchange warehouses, bonded facilities, and commercial storage, allowing the US to build a sizeable copper stockpile without direct government funding.

The market structure currently points to a weaker near-term pull, with COMEX remaining in contango and LME copper in backwardation. The spread between COMEX and LME prices has narrowed since late August, making it less attractive for traders to ship physical copper into the US. While COMEX stocks have risen from 320,000 to nearly 770,000 short tons, China's social inventories fell to a multi-year low of 78,300 mt.

The regional imbalance is visible in China's physical market, with the SMM #1 copper cathode premium approaching $205/mt (RMB 1,400/mt), its highest level since October 2023. This rise cannot be attributed to stronger consumption alone and is supported by global diversion of copper towards the US.