Copper: Tariff risks keep spreads elevated – ING

ING’s Commodities Strategist Ewa Manthey notes that LME copper is trading near record highs, supported by supply tightness, US tariff-driven stockpiling and AI-related power demand. The market is already pricing US tariff risk, with the COMEX-LME spread around $400/t. ING expects a tight global copper balance into 2026, with the tariff outcome shaping spreads and inventory visibility.

Tariff scenarios drive COMEX-LME copper spread

"The US tariff decision on copper imports is weeks away, with the Commerce Secretary due to deliver a recommendation to President Donald Trump by 30 June. The market has already begun pricing the outcome. The COMEX-LME spread has widened to around $400/t, suggesting the market continues to price meaningful tariff risk into US-delivered refined copper."

"LME copper is trading near record highs, with prices up around 10% year-to-date and holding up well against a difficult macro backdrop. Strong US jobs data has reinforced expectations that the Federal Reserve will keep policy restrictive for longer, while renewed tensions involving Iran have weighed on broader risk sentiment."

"A confirmed 15% phased tariff from 1 January 2027 would likely increase the premium of COMEX over LME copper. In practice, both benchmarks would move higher. COMEX would be supported by stronger US import demand, while LME would also benefit as metal diverted away from the US tightens supply availability elsewhere."

"We forecast the global copper market to move into a deficit of around 35kt in 2026, reflecting mine supply losses across Indonesia, Chile, the DRC and Zambia, alongside disruptions to Middle Eastern sulphur flows and sustained end-use demand in electrification and grid infrastructure. The tariff outcome does not change that underlying market balance. However, it will determine how quickly the deficit becomes visible in exchange inventory data and how the price gap between COMEX and LME evolves."

"We see LME copper broadly supported at current levels through 2Q, before easing modestly into 3Q and 4Q as the initial tariff stockpiling impulse fades and macro headwinds persist. The tariff announcement itself represents near-term upside risk to our near-term forecast. A front-loaded 30% tariff would put further upside in play. Conversely, a delay or outright rejection of tariffs represents the clearest downside risk to our view over the second half of the year."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)