Copper: Tariff-driven tightness faces policy risk – ING
ING Commodities Strategist Ewa Manthey highlights that Copper has surged back near record highs as traders accelerate shipments into the US ahead of potential import tariffs, tightening physical markets and draining LME inventories. She notes constrained mine supply, low treatment charges and strong electrification-related demand, but warns that any policy disappointment or narrower-than-expected tariffs could trigger a correction and partially unwind recent gains.
Tariff expectations and market tightness
"Copper is trading above $14,000/t, close to its record high. At the same time, LME inventories have fallen further, and the cash-to-three-month spread has moved deeper into backwardation, highlighting increasingly tight physical market conditions."
"Copper shipments into the US have accelerated ahead of a potential tariff decision, pushing COMEX inventories to a record high. US copper imports exceeded 200,000 tonnes in July alone – the highest monthly level in at least 12 years."
"At the same time, the London copper market is showing increasing signs of tightness. LME inventories have fallen to a five-month low, while the cash-to-three-month spread has widened to around $120/t backwardation– up from about $40 a week ago and the widest since October, pointing to a squeeze on short-term supplies."
"Mine supply growth remains constrained, while low treatment charges continue to point to tight concentrate availability. Demand linked to electrification, power grid investment and AI infrastructure also remains supportive. We continue to expect the global refined copper market to record a deficit of around 35k tonnes in 2026."
"Much of the recent rally reflects expectations that tariffs will be implemented broadly as expected. But if the final measures are delayed, narrower than expected or exempt refined copper, part of the recent rally could unwind. Stockpiling into the US would slow, inventory flows would begin to normalise, and some of the current tightness outside the US would ease. Any correction could be amplified if investors unwind positions built on tariff expectations."
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