Copper is trading above $14,000/t, close to its record high. At the same time, LME inventories have fallen further, and the cash-to-three-month spread has moved deeper into backwardation, highlighting increasingly tight physical market conditions.
In our June note, What’s next for US copper import tariffs?, we examined the possible policy outcomes. Since then, traders have continued to position for potential tariffs, with the impact becoming increasingly visible in trade flows, inventories and physical market indicators.
Tariff expectations remain a key market driver
Copper shipments into the US have accelerated ahead of a potential tariff decision, pushing COMEX inventories to a record high. US copper imports exceeded 200,000 tonnes in July alone – the highest monthly level in at least 12 years.
COMEX inventories reach record highs
Wide COMEX-LME spread continues to attract copper into the US
Source: COMEX, LME, ING Research
At the same time, the London copper market is showing increasing signs of tightness. LME inventories have fallen to a five-month low, while the cash-to-three-month spread has widened to around $120/t backwardation – up from about $40 a week ago and the widest since October, pointing to a squeeze on short-term supplies.
Nearby copper market tightens
LME inventories continue to decline
Can tariff expectations continue to drive prices?
The recent rally is not solely tariff-driven, however.
Mine supply growth remains constrained, while low treatment charges continue to point to tight concentrate availability. Demand linked to electrification, power grid investment and AI infrastructure also remains supportive. We continue to expect the global refined copper market to record a deficit of around 35k tonnes in 2026.
Much of the recent rally reflects expectations that tariffs will be implemented broadly as expected. But if the final measures are delayed, narrower than expected or exempt refined copper, part of the recent rally could unwind. Stockpiling into the US would slow, inventory flows would begin to normalise, and some of the current tightness outside the US would ease. Any correction could be amplified if investors unwind positions built on tariff expectations.
The tariff decision is only part of the story
The prospect of US tariffs has already reshaped the copper market. Inventory flows have shifted, physical conditions have tightened, and prices have moved back towards record highs.
Much of that repricing has already happened. Once the tariff decision is announced, the market's focus is likely to shift back to underlying fundamentals.
That would not necessarily change the broader outlook for copper. Any correction would be more likely to reflect a reassessment of tariff expectations than a deterioration in the underlying fundamentals.
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