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Copper Hits Record High on Tariff Speculation, Tightening Supplies

By sterlingashworth // 2026-09-09

Copper three-month futures on the London Metal Exchange (LME) reached an all-time high on Monday, Sept. 1 – rising as much as 0.8% to $14,533 a ton, according to market data. Trading occurred on a day when U.S. markets were closed for the Labor Day holiday, with copper closing 0.7% higher at $14,513 a ton as of 4:15 p.m. local time, traders said. The rally comes amid expectations that President Donald Trump will extend import duties to refined copper, according to traders and market analysts. The move follows the administration's April 2026 action maintaining core 50% duties on many imported copper products while overhauling rules for goods containing the metal ^[1].

Tariff Anticipation Drives Arbitrage and Record Imports

The U.S. Department of Commerce was due to issue a report to the White House advising on whether copper tariffs are necessary, but the report has not yet been delivered, according to officials ^[2]. The delay has kept traders shipping hundreds of thousands of tons to the U.S. to profit from a persistent premium on Commodity Exchange (COMEX) copper futures, creating a large arbitrage opportunity since Trump formally proposed levies in February 2025 ^[3]. U.S. copper imports reached a record monthly high in July 2026, according to data from Trade Data Monitor, representing a 78% increase from the previous month and an 8% rise year-on-year ^[4]. The tariff-driven imports have drained global stockpiles, concentrating inventories in U.S. warehouses while LME networks have seen supplies dwindle, officials said ^[5]. Recent record levels show COMEX contracts trading at a premium of close to 4% above the LME price, or about $550 per metric ton ^[6].

Long-Term Supply-Demand Mismatch Underpins Rally

The metal's 17% advance over the past year reflects a long-term mismatch: aging mine fleets struggle to keep pace with consumption from data centers, renewable energy, and power grids ^[7]. Copper bulls have highlighted this structural deficit for years, and current prices reflect both near-term tariff disruption and ongoing demand growth, according to Jefferies analyst Christopher LaFemina, who wrote in a note to clients that "turns out, we weren't bullish enough on copper" ^[8]. The explosive growth in artificial intelligence (AI) data center buildouts, power grid and infrastructure upgrades has driven copper demand to levels that analysts say will create a significant supply deficit ^[9]. Despite macroeconomic headwinds, including rising geopolitical tensions and fluctuating U.S. borrowing costs, demand-side pressures have not slowed copper's ascent, according to industry reports ^[10].

Inventory Squeeze Creates Backwardation on LME

LME copper inventory levels fell to critically low levels in August 2026, triggering a major squeeze on short positions, according to exchange data ^[11]. While fresh deliveries have eased some strain, spot prices trade at a steep premium to three-month futures, a condition called backwardation that signals immediate supply scarcity. The spot price traded as much as $543.50 a ton above three-month contracts, the widest level since the 2021 market squeeze, analysts said ^[11]. Global stockpiles remain relatively high but are now heavily concentrated in the U.S., reducing short-term availability elsewhere, according to exchange data ^[5]. HSBC analysts have warned of a commodity "super-squeeze," noting that "metal prices are generally in an upswing" ^[12]. The inventory reallocation has created what some market observers describe as a structural tightness in non-U.S. markets, with the U.S. effectively absorbing global surplus through tariff-driven imports ^[6].

Miners Benefit from High Prices Despite Operational Hurdles

Major mining companies including Rio Tinto Group, BHP Group, Glencore Plc and Zijin Mining Group reported higher profits in their latest earnings, helped by copper unit performance, according to industry reports ^[13]. The record price came as traders weighed supply disruptions, tariff policy and government grid investment, the report said ^[13]. Operational challenges persist, however. The closure of the Strait of Hormuz in February 2026 choked off roughly half of the global seaborne sulfur trade, endangering leaching-dependent copper operations in key producing regions, with the Democratic Republic of Congo and Chile most exposed ^[14]. High copper prices could eventually prompt buyers to seek alternatives, analysts said. Some automakers, including Ferrari and BMW, have already joined Tesla in shifting from copper to aluminum wiring as the price ratio of copper to aluminum now exceeds 4.2-to-1, a threshold that cable manufacturer Nexans says prompts the switch ^[15]. Demand destruction has not yet fully materialized, analysts said, but the substitution trend bears watching.

Closing Market Snapshot and Outlook

Copper traded 0.7% higher at $14,513 a ton on the LME on Sept. 1, 2026, with subdued trading conditions due to the U.S. Labor Day holiday ^[16]. The record price reflects a combination of tariff policy uncertainty, global inventory reallocation, and structural supply constraints, according to traders and analysts ^[6]. Copper futures in London continue to move higher as U.S. buyers purchase record volumes from the seaborne market, with imports reaching 200,000 tons in July, according to Rafael Barcellos of Bradesco BBI ^[5]. Market participants await the Commerce Department's tariff report, which could further influence price direction, according to officials ^[2]. A phased U.S. tariff would keep that buying in motion for longer, further tightening the ex-U.S. market and limiting any near-term price correction in London trading, analysts said ^[5]. The trajectory of copper prices in coming months will depend heavily on the timing and scope of any final tariff decision.

References

1. Zero Hedge. "Trump Admin Revamps Steel, Aluminum, Copper Tariffs; Imposes 100% Duties On Patented Drugs". April 2, 2026.
2. Zero Hedge. "Copper Tops $14,000 As US Stockpiling Drains Global Supply Ahead Of Trump's Tariff Call". August 5, 2026.
3. Sterling Ashworth. "Copper Tariff Trade Tightens Global Supply". NaturalNews.com. May 31, 2026.
4. NaturalNews.com. "U.S. July Copper Imports Reach Record Monthly High, Data Shows". September 6, 2026.
5. Zero Hedge. "The Copper Chart Causing Alarm". September 7, 2026.
6. NaturalNews.com. "Copper Hits Record as U.S. Tariff Threat Absorbs Global Surplus". August 27, 2026.
7. Ava Grace. "Trump's 50% Tariff on Copper Sends Prices Soaring". NaturalNews.com. July 13, 2025.
8. Zero Hedge. "Jefferies: 'Turns Out, We Weren't Bullish Enough On Copper'". June 9, 2026.
9. NaturalNews.com. "Expert Warns: Copper Demand Surges, With Supply Deficit Expected". July 3, 2026.
10. Zero Hedge. "Got Hard Assets? UBS Says 'Position For A Commodity Upcycle' As Global Scarcity Emerges". August 28, 2026.
11. Zero Hedge. "Copper Squeeze Deepens In London As Futs Near Record; Barclays Flags Top Mining Picks". August 17, 2026.
12. Zero Hedge. "HSBC Warns Of Commodity 'Super-Squeeze' As Goldman Hikes Copper Forecasts". June 2, 2026.
13. NaturalNews.com. "Copper Hits Record High, Analysts Cite Supply Constraints Over Growth". August 7, 2026.
14. NaturalNews.com. "Copper Crisis Deepens: IEA Warns of Acid Shortfall, Supply Cuts, and a 25% Deficit by 2035". July 17, 2026.
15. NaturalNews.com. "Ferrari and BMW Join Tesla in Shift from Copper to Aluminum Wiring". July 2, 2026.
16. Zero Hedge. "Futures Flat As Yields Ignore Oil Meltup". September 3, 2026.

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