COMEX copper futures extended their decline on Friday, settling at $6.2855/lb, down 3.46% from the prior week's close of $6.5110/lb. The sell-off reflects growing uncertainty over US tariff policy, with a Section 232 recommendation on copper imports expected by late June. Goldman Sachs Research projects a minimum 25% tariff on refined copper imports, prompting pre-emptive stockpiling that has distorted normal trade flows and widened the COMEX-LME arbitrage.
On the London Metal Exchange, three-month copper traded at $12,100 per tonne, down 2.1% from last week. The contango structure has flattened as prompt-date supply tightness persists. LME on-warrant stocks declined 4.2% to 195,400 tonnes, with cancelled warrants at elevated levels indicating continued physical withdrawals for US delivery. The CMX premium over LME has widened to approximately $850/t, reflecting the cost of diverting material into US warehouses ahead of potential tariffs.
Chile's copper production fell to 415,000 tonnes in April, the weakest April output in 23 years, according to Cochilco. Declining ore grades at Codelco's aging deposits and water restrictions in the Atacama region contributed to the shortfall. Global mine supply remains constrained, with spot treatment charges falling to -$70/t in late March, signaling extreme concentrate tightness that is compressing smelter margins worldwide.
With the COMEX premium persisting and tariff decisions pending, buyers should consider LME-linked pricing with US delivery flexibility. Lock in H2 volumes now to avoid a potential 25% tariff shock. The Chile output data confirms structural supply constraints that will keep prices elevated through year-end.