Why Copper’s Record Rally Created a Two-Speed U.S. and Global Market

The copper rally was not simply a story of the world running out of metal. It was, above all, a location-and-timing squeeze: the prospect of U.S. tariffs on refined copper made it valuable to ship cathode into the United States before any duty took effect. That redirected material away from London Metal Exchange delivery locations and other consuming regions, lifting the value of immediately available metal outside the U.S.1819

The LME’s record intraday high was $14,527.50 per metric ton. In late August, three-month copper again approached that level as large withdrawal orders reduced the metal readily available in LME warehouses.18

The proposed tariff created an incentive to stockpile in the U.S.

The Commerce Secretary recommended a phased universal tariff on refined copper of 15% beginning in 2027 and 30% in 2028. Those rates were recommendations, not an already-effective tariff on refined copper; the measures in force covered specified semi-finished copper products and copper-intensive derivatives.117

That distinction mattered. A trader able to import and warehouse refined copper in the U.S. before a future duty could hold metal that might later be worth more in a tariff-protected market. The resulting price premium for U.S.-delivered copper encouraged imports and cross-market arbitrage.

Reuters reported that U.S. refined-copper imports rose 80% year over year to 1.64 million metric tons in 2025. Arrivals increased another 13% to 763,000 tons in the first five months of 2026.19 This front-loading helps explain the apparent contradiction of rising U.S./COMEX inventories alongside falling LME availability: it was largely a redistribution of metal, rather than proof of an equivalent rise in global consumption.

Why copper became a two-speed market

COMEX copper increasingly traded as metal that could be delivered into a potentially tariff-protected U.S. market. LME copper remained the international benchmark, exposed to the risk that it would face a duty if imported into the U.S. after any policy change.

As a result, the COMEX–LME gap became more than a normal freight-and-financing arbitrage. It became a market signal of expected tariff risk. Reuters noted that the CME contract represents U.S. duty-paid copper while the LME price is international, and that the forward price gap widened as markets assessed the possibility of refined-copper tariffs.20

The effect was a two-speed market:

• U.S. market: higher delivered prices and growing stockpiles as traders positioned ahead of possible tariffs.
• International market: less readily deliverable metal in LME locations and tighter prompt availability.

That is why a tariff threat can push prices higher even without an outright global shortage. Metal moved toward the market where its future value appeared greatest, leaving less available elsewhere.18

Why LME backwardation intensified

Backwardation occurs when cash metal costs more than futures for later delivery. It is usually a sign that buyers, shorts and industrial users place a premium on having material now rather than later.

In this episode, shipment diversions and warehouse withdrawals reduced the pool of immediately available LME copper. Reuters reported that available LME inventory fell to 90,000 tons and that the cash premium over the three-month contract widened sharply.18 The spread was therefore a signal of stress in prompt deliverable supply, not necessarily a verdict that total global inventories had vanished.

Supply risks made the geographic squeeze more powerful

The tariff-driven relocation occurred against a backdrop of genuine supply uncertainty.

Chile’s Codelco reported first-half production of 564,000 metric tons, down 11% from a year earlier, citing operational restrictions at El Teniente, lower output at Chuquicamata and weaker grades at Ministro Hales.29 Codelco has also said El Teniente production will remain depressed for about five years following the mine accident.32

In the Democratic Republic of Congo, the government imposed an immediate ban on exports of copper and cobalt concentrates, though one-year waivers may be granted in strategic circumstances.28 Concentrate is not refined cathode, so this does not directly remove LME-deliverable metal. But it introduces uncertainty for smelter feed and future refined supply.

These disruptions do not by themselves establish a present global shortage. They do, however, increase the market’s sensitivity to any removal of metal from normal trade routes. When mine output is constrained by operational problems and weaker ore grades, it is harder for supply to respond quickly to a location-specific shortage.

The June deficit was real—but it was not the whole picture

International Copper Study Group data showed a 60,000-tonne refined-copper deficit in June, following a 15,000-tonne surplus in May. Yet the January-to-June balance remained a 131,000-tonne surplus.46

The proper reading is nuanced:

• June pointed to a tighter monthly market.
• The first-half balance did not establish a sustained global physical shortage.
• Exchange-location scarcity can still drive high prompt prices even while the worldwide balance is near surplus.

This is the key to understanding the rally: a global balance is not the same thing as metal being available in the right warehouse, in the right form, at the right time.

What could happen next

If refined-copper tariffs are imposed broadly

Pre-positioned U.S. inventory could retain a meaningful commercial advantage. The COMEX–LME premium could persist, and the diversion of material into the U.S. could continue to leave non-U.S. prompt supply comparatively tight.

If the policy is delayed, narrowed or abandoned

The rationale for holding large U.S. inventories would weaken. Holders could choose to sell, consume or re-export copper, easing pressure on LME locations and potentially narrowing the U.S.–London price gap.

If physical supply disappoints further

An inventory unwind would not automatically end the bull market. Further mine disruptions, slower refined output or tighter concentrate availability could shift the story from a policy-led relocation to a broader supply constraint.

Bottom line

Copper’s record-level pricing reflected two forces at once: a policy-driven relocation of refined metal toward the U.S. and a real supply-risk premium arising from mine disruptions and constrained output. The first is highly sensitive to the final Section 232 decision. The second may last longer.

For now, the most important question is not whether copper exists somewhere in the world. It is whether it remains available outside the U.S. in the locations and timeframes required by the LME market and physical buyers.1819