The threat of US import tariffs helped build copper stockpiles of more than 1 million metric tons in the United States. The flow is slowing as traders await a decision on the levies, and the arbitrage that drove the shipments is now about $310 a ton, down from a peak above $3,000.
The tariff threat from President Donald Trump helped build US copper stockpiles of more than 1 million metric tons, but the flow is slowing as traders await a decision on the levies. Comex-approved warehouses now hold roughly 70% of the world's visible copper stocks, which has created shortages elsewhere and fuelled a price surge despite a global surplus.
The arbitrage that pulled metal into the US
Traders have shipped copper to the United States since Trump ordered a study on potential tariffs in February last year. Comex prices then hit a record $6.83 a lb, or $15,057 a ton, on September 22.
That opened a positive arbitrage in favour of Comex over London Metal Exchange copper. The gap peaked above $3,000 a ton in July last year and now stands at about $310 a ton.
Wood Mackenzie analyst Charles Cooper said the arbitrage has collapsed, so the incentive to keep moving metal to the US is much weaker right now. Panmure Liberum analyst Tom Price said: "Only traders are making money."
A January deadline looms
The US Commerce Department was due to report on the domestic copper market by June 30. Trump could then decide whether to impose a 15% tariff on refined copper imports from January 1, 2027, rising to 30% in 2028. No decision has been announced.
Macquarie analyst Alice Fox sees one scenario as most likely: the January deadline passes without a decision. In that case, she said, the arb would likely come off in the short term, then return to current levels.
Comex copper stocks rise to more than 714,000 tons
Macquarie estimates US copper stocks, on and off exchange, now total about 1.6 million tons. Comex copper stocks have climbed nearly 750% since the end of February last year to more than 714,000 tons.
The US imported more than 1.62 million tons of copper last year, up 80% from 2024, according to Trade Data Monitor. The US Geological Survey put US production at 1 million tons, leaving a surplus.
Whether tariffs arrive will be a key talking point at LME Week in London, starting on October 18.
Source: Investing.com (Reuters)
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