Copper hits all-time high on LME amid US tariff fears

Copper surged to its highest-ever price on the London Metal Exchange on Monday, with benchmark three-month futures climbing as much as 0.8% to $14,533 a ton, surpassing the previous record set in January. The rally caps a weeks-long advance driven by expectations that President Donald Trump will expand US tariffs to imports of refined metal, prompting a wave of preemptive buying that has reshaped global trade flows.moneycontrol+1

Tariff Anticipation Drives Front-Loading

An ongoing Section 232 investigation into copper imports has markets bracing for duties, with proposals reportedly circulating for a 15% tariff starting January 2027, potentially rising to 30% by 2028. The Department of Commerce was due to deliver its recommendation to the White House roughly two months ago, but the market is still pricing in the possibility of tariffs.cryptobriefing+1

The uncertainty has triggered a massive rerouting of global copper supplies toward the United States. US refined copper and alloy imports hit a record 225,094 metric tons in July, up 78% month on month, with Chile and the Democratic Republic of Congo among the largest suppliers. COMEX warehouse stocks have swelled to record levels, while LME inventories have thinned — standing at roughly 234,175 tons — creating tightness outside the US that has amplified the price rally.news.metal+2

Supply Squeeze Compounds the Pressure

Beyond tariff dynamics, copper's 17% advance over the past year reflects a deeper structural imbalance. The world's aging fleet of mines is struggling to keep pace with demand from data centers, renewable energy installations, electric vehicles, and power grid upgrades. Chilean copper production fell 9.4% year on year in July due to adverse weather and maintenance shutdowns at major operations, while the DRC recently banned copper and cobalt concentrate exports to promote domestic processing.investinglive+3

Declining ore grades at existing mines mean producers must process more material to extract the same amount of copper, raising costs and limiting output growth. Bringing new mines online can take a decade or more from discovery to first production, meaning higher prices alone cannot quickly resolve the supply gap.investinglive

A Bifurcated Global Market

The result is a two-speed copper market. US warehouses are brimming with metal stockpiled as a hedge against tariffs, while buyers in Europe and Asia face squeezed availability. The LME forward curve has been in backwardation — a signal of near-term tightness — though the cash-to-three-month premium narrowed sharply in recent weeks from over $500 per ton to around $93. A stronger US dollar following better-than-expected August payrolls data has partially offset the rally, but supply anxieties have so far outweighed that headwind.investmentguruindia+1

The global refined copper market recorded a 60,000-ton deficit in June after a surplus in May, underscoring the volatility of the balance between supply and demand. For now, the market's direction hinges on whether the White House acts on tariffs — a binary outcome that could either validate the record-setting stockpile or trigger an unwind.investing