With the possibility resurfacing that U.S. President Donald Trump could impose a tariff on copper, the global copper market is roiling. U.S. copper prices are exceeding international quotes, prompting global commodities brokers to ramp up arbitrage moves. Some in the market also say a deepening supply shortage outside the United States could push copper prices even higher.
Bloomberg reported on the 28th (local time) that as New York Mercantile Exchange (COMEX) copper prices have recently far outpaced London Metal Exchange (LME) quotes, global commodities brokers are heading to the United States and competing to secure volumes. The current COMEX front-month price is trading more than $500 (753,550 won) per ton above the LME cash price. It is the widest spread since last fall.
The market assessed that the Trump administration's potential imposition of an import tariff on refined copper to protect U.S. manufacturing is influencing the industry. The U.S. Department of Commerce is set to release by June 30 the results of a probe assessing how copper imports affect national security and industry. On that basis, the market is discussing the possibility that the United States could impose up to a 15% tariff on refined copper starting in 2027.
Accordingly, global commodities firms are quickly increasing shipments bound for the United States. That is because copper secured overseas can be brought into the United States and sold at higher local prices. The industry expects U.S. monthly copper imports could expand again to the 150,000–200,000-ton range.
Trafigura, one of the world's largest commodities distribution and transaction brokerage firms, recently withdrew hundreds of millions of dollars worth of copper from London Metal Exchange warehouses. Bloomberg said the move is aimed at capitalizing on the high premium in the U.S. market. The size of the withdrawal is said to be the largest since 2013.
Experts also said there is a chance the global supply crunch could worsen as copper flows concentrate in the United States. With inventories in China already beginning to fall, a further shift of volumes to the United States could intensify supply shortage pressures in the LME market.
Copper prices are already rising. In the London market, copper at one point that day climbed to $13,746 (20,716,596 won) per ton. That is about a 43% increase from the same period last year.
However, Bloomberg said conditions for shipping copper to the United States are deteriorating. The global shipping market has been further disrupted by the Iran war, and congestion at the Panama Canal has compounded delays, lengthening transit times for South American copper to the United States.
Nicholas Snowdon, chief economist at Mercuria Energy Group, said, "Copper markets outside the United States are already in a state of shortage," and added, "If a U.S. tariff materializes, the pace of LME inventory draws will accelerate further in the second half of this year."