Copper is trading at approximately $6.17/lb ($13,600/t) as of July 3 on the LME, up 0.9% day-on-day and holding near levels that would have been unthinkable before 2024. TradingEconomics data shows the metal is 23% higher than a year ago, despite falling 5.3% over the past month as the Strait of Hormuz reopened and Gulf supply fears eased. MacroMicro reports LME copper spot at $13,170-13,220/t on July 1, confirming the metal remains firmly above $13,000.
The dominant narrative is no longer about Chinese demand or global industrial production. It is about where the metal sits, who can access it, and what tariffs will do next. US Section 232 copper tariffs, finalized on June 30 after the Commerce Department's report to the President, have created a two-tier global market. COMEX inventories hit a record 650,000 tonnes in late June, while LME stocks fell to 352,100 tonnes, a near three-month low, according to TradingKey. The US is now sitting on more copper reserves than any country except China's state stockpile manager. Including off-exchange storage, Reuters estimates US copper holdings likely exceed 1 million tonnes.
This inventory concentration is a direct result of tariff arbitrage. Between February and July 2025, China redirected approximately 120,000 tonnes of refined copper to the US ahead of expected import duties, Reuters reported in January 2026. When Trump ultimately tariffed copper products rather than refined metal in July 2025, the CME-LME arbitrage imploded, with LME even commanding a premium over CME in early 2026. But CME premiums have since bounced back as the June 30 deadline loomed and fresh stockpiling began. The Dimerco trade advisory confirms that goods subject to copper tariffs must now enter FTZs in Privileged Foreign status, and a phased universal duty on refined copper imports remains under active consideration.
Goldman Sachs updated its forecast in June, raising its year-end 2026 LME copper target from $12,465/t to $13,735/t. The bank warned that if proposed refined copper tariffs take effect, prices could surge above $14,000/t in the second half of 2026, triggering another wave of US stockpiling. The bank's average 2027 forecast sits at approximately $13,800/t, reflecting structural tightness from mine supply constraints and growing demand from electrification, AI infrastructure, and defense spending.
Not everyone is this bullish. S&P Global projects an average 2026 LME copper price just above $12,100/t, noting that visible global inventories exceeded 1.3 million tonnes in March. The Chilean copper commission Cochilco raised its 2026 forecast to $5.55/lb ($12,200/t), forecasting only a 12,000-tonne refined surplus as global mined output grows just 0.5%. Morgan Stanley's base case sits at approximately $10,650/t, with upside near $12,780/t if supply tightens further. The World Bank is more conservative at $9,800/t. The wide dispersion in forecasts reflects genuine uncertainty about tariff outcomes, Chinese demand, and mine supply performance.
Chinese demand has been soft. Refined copper imports in January-February 2026 totaled 454,000 tonnes, down 25% year-on-year, according to Reuters. SHFE stocks surged around Lunar New Year to 301,000 tonnes before easing as buyers returned. DiscoveryAlert notes that domestic spot premiums have traded at discounts to SHFE futures since mid-January, indicating limited restocking appetite at record price levels. Chinese refined copper demand fell an estimated 8% year-on-year in Q4 2025, according to Goldman Sachs, after front-loaded buying linked to stimulus and tariffs faded.
On the supply side, Cochilco projects global mined copper output of 23.3 million tonnes in 2026, up just 0.5%, before rising 4.7% in 2027 as projects in the DRC, Zambia, Mongolia, Canada, and the US ramp up. But disruptions at major operations including Grasberg, Kamoa-Kakula, and El Teniente have kept the market tighter than output projections suggest. The copper concentrate market is expected to remain tight for years, with S&P Global projecting a cumulative deficit of approximately 3 million tonnes by 2036.
The near-term picture is one of dislocation rather than outright shortage. The US has ample metal. The rest of the world does not. If refined copper tariffs are imposed, US buyers will stockpile further, draining LME stocks and pushing international prices higher. If tariffs are delayed or softened, COMEX premiums could collapse again, releasing metal back into global markets. The Commerce Department's June 30 report sets the stage for a presidential decision on refined copper duties. That decision, more than any mine supply or demand forecast, will determine where copper trades in the second half of 2026.
J.P. Morgan's copper strategist notes that a sustained rise in Brent crude to $110/bbl could strip 1.4 percentage points from copper demand growth estimates for 2026, highlighting the metal's sensitivity to macro conditions beyond its own supply-demand fundamentals. The strong June US jobs report initially raised rate-hike expectations, weighing on metals, but the weaker-than-expected payroll number on July 3 has markets pricing only a 50% chance of a September rate increase, providing some relief.
Copper buyers face a market where price risk is primarily binary and political, not gradual and fundamental. The presidential decision on refined copper tariffs transforms the H2 outlook. If tariffs are imposed, secure Q3-Q4 volumes now at the current ~$13,200/t base before CME premiums spike and LME metal becomes harder to source outside the US. Negotiate contracts with explicit tariff pass-through clauses — do not bear this risk silently. For buyers outside the US, the risk is that LME stocks drain further as metal flows to the higher-priced US market. Monitor LME on-warrant inventory weekly — if it drops below 250,000t, the physical market will be dangerously tight. Consider splitting Q4 coverage: 60% fixed-price at current levels, 40% floating with a $14,500/t cap. The Goldman Sachs $13,735/t year-end target implies only 4% upside from current levels, but the tail risk of a tariff-driven spike to $14,000+ is material. Hedge the tail, not the base case.