US Copper Price Bubble Deflates as Tariff Threat Creates Glut

US Copper Market Faces Correction After Tariff-Driven Price Surge

The U.S. copper market is poised for a correction following a period of inflated prices driven by concerns over President Trump's proposed 50% tariff on copper imports.

Tariff Threat Led to Stockpiling and Price Spike

Anticipation of the tariff, expected to be implemented around August 1st, prompted significant stockpiling, resulting in a 25% increase in copper prices on the COMEX exchange between January and early July. This surge created a record premium of over $2,920 per ton compared to prices on the London Metal Exchange (LME), the global benchmark.

Analysts Predict Price Convergence

As the initial shock of the tariff announcement subsides, analysts predict a convergence of U.S. and LME copper prices. Tom Price, an analyst at Panmure Liberum, expects U.S. prices to decline due to weak demand and a projected 16% drop in consumption this year, estimating consumption to be around 1.32 million tons.

High Inventory Levels Add to Downward Pressure

Excessive inventory levels are also contributing to the anticipated price decline. Macquarie analysts estimate that U.S. copper imports exceeded requirements by approximately 440,000 tons in the first half of the year, indicating a significant surplus.

LME Stocks Decline as U.S. Stocks Rise

While U.S. copper stocks have increased, LME stocks have decreased. Some imported copper is being stored in U.S. free trade zones, which could facilitate future re-exports.