Copper traders are growing cautious as tariff uncertainty clouds the bull market outlook, with prices having surged on expectations of Trump-era levies. Since Trump’s return to office, copper futures in New York have traded at persistent premiums to London Metal Exchange prices, enabling profits from shipping copper to the U.S. ahead of potential tariffs. This has driven inventories outside the U.S. to plunge and LME prices to a record near $15,000 a metric ton.
However, as midterm elections approach, investors question whether a Democratic win could disrupt Trump’s trade agenda—or prompt him to double down on tariffs. Analysts at Natixis SA warn the tariff-driven rally has created a bubble that could burst if tariffs are ruled out, with Macquarie Group suggesting prices could crash to $10,000 a ton in that scenario, or rally to $18,000 if tariffs are delayed. Traders are increasingly betting against tariffs via the Comex-LME spread, which has collapsed after widening significantly since February 2025.
Sucden Financial Ltd. reports renewed interest in arbitrage trades as the spread narrows, reversing earlier reluctance due to tariff fears. Physical shipments of U.S.-bound copper from Africa are already declining as the spread compresses, per Kpler data. With LME Week underway in London, market participants debate whether fading tariff expectations will allow gravity to reassert itself on copper prices amid rising energy costs.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing