Tariff uncertainty tests copper’s record rally
The desk views copper's recent price action as a critical juncture shaped by tariff uncertainty, revealing an overshoot from current fundamentals. As noted in the full note from ING, copper fell over 3% after reaching a record high of $14,875/t amid reports of pending U.S. tariff decisions on refined copper. Early expectations favored a tariff implementation, contributing to soaring prices, but the lack of decisive policy has unwound this premium, indicating a potential recalibration ahead of robust market fundamentals. The volatility in this sector underscores the importance for traders to monitor industrial demand signals and geopolitical developments closely.
What the desk is arguing
Copper's recent record high and the subsequent sharp decline highlight the inherent risks tied to tariff speculation. The price drop, linked to the absence of a U.S. decision on refined copper tariffs, suggests that the market may have overly priced in expectations of protectionist measures. Per the full note from ING, this $14,875/t peak was premised on anticipated tariffs that have not yet materialized.
The sell-off resulted in the loss of a tariff premium that had previously driven COMEX prices above those on the LME. Reports indicate that copper inflows into U.S. warehouses reached an unprecedented 220,000 tonnes in July, marking the significance of tariff expectations on market dynamics. As traders reassess their positions in the context of loose supply and fluctuating prices, focusing on the underlying fundamentals will be essential.
Where it sits in our coverage
Our conservative view aligns with jpmorgan, targeting 1.10 for Mar-26, while bofa forecasts a lower price of 1.04, indicating a divergence in market sentiment among firms regarding copper's trajectory given current uncertainties.
The desk's outlook falls within this broader spread, reflecting the cautious sentiment toward industrial metals amidst shifting tariff policies and economic conditions. The implied volatility in copper prices necessitates a careful approach to trade positioning as traders wait for clearer signals from geopolitical developments.
How other firms see it
Firms like jpmorgan are aligned in their bullish view on copper prices, forecasting near-term strength based on industrial demand. In contrast, bofa has adopted a more cautious stance, aligning itself with bearish forecast ranges for the upcoming months.
Traders should pay attention to macroeconomic indicators in the U.S. that directly impact industrial metals, notably manufacturing PMIs and broader commodity demand trends, as they will likely influence overall price direction moving forward.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Copper prices declined sharply post-record high due to tariff uncertainty.
- 02Market has priced in the potential for refined copper tariffs, now in question.
- 03Significant inflows into U.S. warehouses reflect the tariff premium's influence.
- 04Divergence in firm forecasts indicates differing views on copper's future price trajectory.
Market implications
Traders should monitor the $14,875/t threshold closely, alongside upcoming industrial demand indicators, which could signal shifts in price dynamics. A decisive U.S. tariff decision could either stabilize or further depress copper prices depending on the administration's direction.
Risks to this view
Should the U.S. government impose tariffs unexpectedly or announce supportive measures for domestic production, it could drastically shift copper price expectations and invalidate the current outlook of declining prices due to tariff speculation.
Articles Tariff uncertainty tests copper’s record rally Published 18:01 Commodities, Food & Agri Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Copper has fallen sharply from a fresh record after Reuters reported that a US decision on refined copper tariffs has not yet been made. The move shows how a growing tariff premium has pushed prices ahead of current fundamentals Ewa Manthey Copper's reversal highlights the gap between prices and fundamentals Copper fell more than 3% on Thursday after hitting a record $14,875/t on the London Metal Exchange earlier in the session. The sell-off followed a Reuters report that the White House has yet to decide whether to impose tariffs on refined copper.
Officials are weighing support for domestic production against the risk of higher costs for US manufacturers. Until now, the market had largely assumed that tariffs would go ahead. The latest news has challenged that view and taken some of the tariff premium out of copper prices.
Tariff premium drives prices higher Refined copper was excluded from the 50% tariffs imposed last year on certain semi-finished and derivative copper products. The Commerce Department was due to update the president by the end of June on whether refined copper should face a 15% tariff from January 2027, rising to 30% in 2028. No decision has been announced.
The prospect of tariffs pushed COMEX prices above the LME, opening a profitable import window. Traders moved more copper to the US to take advantage of the price gap. But the tariff premium has not been limited to the US.
The movement of metal into American warehouses reduced availability elsewhere, helping to lift LME prices. US tariff premium drives copper higher Source: COMEX, LME, ING Research "> Source: COMEX, LME, ING Research Copper piles up in the US July inflows topped 220,000 tonnes, setting a monthly record. By early September, COMEX warehouses held around 680,000 metric tonnes – roughly eight times the volume recorded at the beginning of 2025.
Market estimates put total US holdings above one million tonnes once copper outside the exchange system is included. This has left the US well supplied while inventories available elsewhere have fallen. If the tariff premium between New York and London narrows, shipping more metal to the US will become less attractive.
Some stocks could eventually return to international markets. Copper inventories shift to the US Source: COMEX, LME, ING Research "> Source: COMEX, LME, ING Research Prices run ahead of fundamentals Copper’s longer-term fundamentals remain supportive. ICSG data show that mined output was 1.1% lower year-on-year in the first half.
Without a stronger recovery during the remainder of 2026, this would be the first annual contraction in mine supply since 2017. 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. However, the refined market is not yet facing an outright shortage.
Refined production rose 2.4% in the first half, leaving a preliminary surplus of around 131,000 tonnes, according to ICSG. Some indicators of immediate tightness have also eased. LME inventories have stabilised this month, while pressure at the front of the LME curve has eased.
Although cash copper still trades above the three-month contract, the backwardation has narrowed considerably from its August peak. Nearby supply remains tight, but conditions are less stretched than they were last month. These signals suggest that the move towards $15,000/t had run ahead of current fundamentals.
LME copper backwardation eases from August peak Source: LME, ING Research "> Source: LME, ING Research Tariff decision remains key Either way, the arbitrage will eventually close. If tariffs are ruled out, the US premium should narrow and some metal could return to international markets. If they go ahead, imports could rise again before the duties take effect, but should slow afterwards.
Copper’s longer-term outlook remains positive. But the latest reversal shows that prices remain vulnerable to any further weakening in tariff expectations. Copper tariffs 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 premium drives prices higher Copper piles up in the US Prices run ahead of fundamentals Tariff decision remains key
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