U.S. importers hauled in more than 200,000 tonnes of refined copper in July, marking the largest monthly volume in at least 12 years, according to reporting by Oilprice.com. When combined with existing stocks in COMEX warehouses, LME-registered facilities, and private port storage, the country's total copper stockpile has now surpassed 1 million tonnes, driven almost entirely by speculation that Washington will implement tariffs on refined copper imports. The surge in U.S. inventory stands in stark contrast to tightening conditions elsewhere.
LME warehouse stocks have declined for 42 consecutive sessions, the longest losing streak since 2014, falling to just 204,975 tonnes with nearly half already marked for withdrawal. This divergence has created unprecedented market stress. Cash copper is currently trading at a $434-per-tonne premium to the three-month contract, the widest spread since the 2021 squeeze that prompted London Metal Exchange intervention.
Spot prices have climbed near $14,500 per tonne as buyers scramble for immediately available metal. President Trump's proposed tariff policy is the primary driver of this geographic split. The administration is considering a 15% duty on refined copper imports beginning January 2027, escalating to 30% in 2028.
This uncertainty has prompted U.S. importers to front-load purchases ahead of any implementation. The Commerce Department missed its June 30 deadline for delivering a formal tariff recommendation, leaving traders positioned for either outcome. ING commodities strategist Ewa Manthey told CNBC that the COMEX-LME spread has become an increasingly reliable gauge of U.S. tariff expectations, with the wider premium continuing to pull metal into American warehouses while draining global supplies.
Societe Generale estimates the probability of the 15% tariff actually taking effect on schedule at just 14.6%, based on current market pricing, suggesting traders believe much of this import surge could prove unnecessary. The global supply squeeze extends beyond tariff hedging dynamics. The Democratic Republic of Congo's ban on copper concentrate exports has forced Chinese smelters to curtail operations.
Production disruptions at major operations have compounded supply constraints: Antofagasta's Los Pelambres mine was temporarily offline due to storms, Chile's state-owned Codelco pushed its Andes Norte project to 2029, and Chile's national output remains constrained near 5.5 million tonnes annually. Freeport's Gresik smelter in Indonesia has been down since August 8. Miner valuations have diverged sharply based on exposure to this squeeze.
Ivanhoe Mines gained approximately 15% during August, while First Quantum rose 12%. Antofagasta, which reduced production guidance, slipped roughly 3% over the same period. The metals are concentrating in U.S. warehouses due to tariff politics while remaining critically short elsewhere, creating what analysts describe as an economically trapped tonne.
The ultimate market outcome hinges on the tariff decision. A confirmed 15% tariff would likely trigger another wave of defensive buying into COMEX, intensifying pressure in London. Conversely, a delay or reduction in tariff rates could prompt rapid draining of U.S. warehouses back onto global markets, potentially undercutting the current rally.
As it stands, copper inventory positioning reflects political calculation rather than fundamental supply-demand balance, with the metal sitting where policy has placed it rather than where the world's industrial users require it. Source: Oilprice.com, August 17, 2026. Article by Michael Kern.
Source: oilprice.com