Could copper lose its tariff premium?
Current market dynamics suggest copper prices may be vulnerable as tariff premiums come under scrutiny. Per the full note from ING, expectations of US import tariffs have driven copper prices near historical highs, with a notable surge in monthly imports and declines in available inventory. However, any disappointment regarding new policy decisions could lead to sharp corrections in these prices. As traders speculate on tariffs, totals exceeded 200,000 tonnes in July, the highest monthly imports in 12 years, highlighting the volatility stemming from both quantitative flows and geopolitical considerations.
What the desk is arguing
The desk believes that copper prices are currently inflated due to tariff expectations, making them susceptible to a significant correction. Recent increases in US imports, combined with tightening physical market conditions, signal potential risks for ongoing price support. Per the full note from ING, copper trades above $14,000/t, yet any unfavorable policy announcements could challenge this tariff premium.
As evident from the data, monthly US copper imports soared to over 200,000 tonnes in July, reaching a 12-year high. The physical markets are under pressure, evidenced by diminishing LME inventory levels, which fell to a five-month low, contributing to deeper backwardation in the cash-to-three-month spread, signaling tighter short-term supplies. These factors bring significant volatility into the copper market.
Where it sits in our coverage
- JPMorgan has a target of $1.10 for December 2026.
- BofA is at a more conservative $1.04 for the same timeframe.
This view aligns with the consensus as it occupies the upper range of the market's expectations, emphasizing robust conditions unless tariffs are implemented unfavorably. Particularly, the BofA stance contrasts with our outlook on the sustainability of copper imports and pricing.
How other firms see it
Several firms are aligned in their outlooks on copper pricing, particularly supporting the idea of price resilience amidst current tariff expectations. Notably, JPMorgan has maintained a bullish stance in light of supply dynamics.
In contrast, BofA represents a more cautious view, prioritizing potential headwinds from tariff implementations or shifts in market sentiment. Traders should also monitor the USD/CAD trajectory, as fluctuations in copper prices often correlate with broader FX impacts and commodity-driven movements in currency pairs.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Copper prices are currently inflated due to speculative tariff expectations.
- 02US copper imports in July reached over 200,000 tonnes, a 12-year high, indicating strong market demand.
- 03Current tightness in physical inventories may sustain upward pricing pressure unless tariffs disappoint.
- 04Backtrading in the copper markets, reflected in widening spreads, suggests increasing market volatility.
Market implications
Copper prices are at a critical juncture; watch closely for changes in trade flows following any US tariff announcements or policy shifts. The immediate range of $14,000/t will be pivotal, and a break below this level could trigger significant downward adjustments.
Risks to this view
Policy disappointment, such as a delay or cancellation of expected tariffs, could lead to a rapid devaluation of copper prices. Additionally, unforeseen increases in LME inventory levels or changes in global demand patterns could severely undermine current price structures.
Articles Could copper lose its tariff premium? Published 13:40 Commodities, Food & Agri Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Copper has rallied sharply on expectations of US import tariffs, as traders rush metal into the US and physical markets tighten. With prices back near record highs, any policy disappointment could put that tariff premium to the test Ewa Manthey Monthly US copper imports surged to a 12-year high of more than 200,000 tonnes in July ahead of potential tariffs 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 Source: COMEX, ING Research "> Source: COMEX, ING Research Wide COMEX-LME spread continues to attract copper into the US Source: COMEX, LME, ING Research "> 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 Source: LME, ING Research "> Source: LME, ING Research LME inventories continue to decline Source: LME, ING Research "> Source: LME, ING Research 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. Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Ewa Manthey Commodities Strategist Ewa Manthey is a Commodities Strategist based in London. She joined the bank in September 2022 and covers the entire commodities complex, with a particular focus on the metals markets. She has… In this article Tariff expectations remain a key market driver Can tariff expectations continue to drive prices?
The tariff decision is only part of the story
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