Combined LME+SHFE+COMEX copper inventories exceeded 1 million tonnes in May 2026 — the highest total in 23 years. Yet LME copper prices traded above $14,000/t, approaching the all-time high of $14,527 set on January 29. The paradox resolves on geographic breakdown: COMEX held a record 548,000 tonnes of tariff-driven stockpiles, while LME on-warrant stocks outside China fell well below 100,000 tonnes. J.P. Morgan described this as "significant inventory dislocation." (FACT: COMEX, LME, Reuters; J.P. Morgan)
The mechanism is well understood. US importers rushed to bring copper into COMEX warehouses ahead of anticipated Section 232 tariff expansions, creating an artificial surplus in the US. Meanwhile, the rest of the world — particularly Europe and Asia — faced acute physical shortages as the Gulf crisis disrupted supply chains and mine outages constrained concentrate availability. The copper is physically present in the global system but concentrated in the wrong location to serve real demand. (FACT: Reuters, April 2026)
The COMEX-LME arbitrage has been the primary mechanism moving metal. Traders have been shipping copper to the US to capture the premium created by tariff expectations, draining LME warehouses in the process. The arbitrage window may close if tariffs are confirmed — at which point the COMEX stockpile becomes stranded, and the dislocation could persist until either the tariff regime changes or physical demand outside the US forces a rebalancing. (FACT: Reuters, LME, J.P. Morgan)
For the physical market outside the US, the inventory dislocation is a supply crisis. LME on-warrant stocks in European and Asian warehouses — the metal that is immediately available for physical delivery — are at critically low levels. Any incremental demand shock or supply disruption will be amplified by the lack of available metal in the LME system, regardless of how much copper sits in COMEX sheds. (FACT: LME, Reuters)
Do not be misled by the record 1 Mt global inventory number. The copper you need is likely in the wrong place. European and Asian buyers face a market where LME-available metal is below 100,000t — less than half a day of global consumption. Procurement strategy: (1) If you buy on LME terms, expect continued backwardation and difficulty securing prompt delivery. (2) US buyers may find relative availability in COMEX warehouses, but at elevated prices. (3) Monitor the Section 232 tariff decision — if copper tariffs are confirmed, COMEX stocks become stranded and LME tightness intensifies. If tariffs are not expanded, expect a rapid reversal as metal flows back to LME. (4) The June tariff review is the single most important catalyst for the copper market in the next 30 days.