(The opinions expressed here are those of Andy Home, a columnist for Reuters.)
Here we go again.
The deadline for a US decision on whether to impose tariffs on refined copper imports is looming at the end of next month.
The market reaction is a widening in the arbitrage between the CME’s US duty-paid copper contract and the London Metal Exchange’s (LME) international price .
The rising premium for US delivery is drawing more metal into the United States, tightening up availability everywhere else.
If all this sounds familiar, it’s because the copper market was in exactly the same state of nervous anticipation this time last year.
US President Donald Trump ended up confounding expectations by imposing tariffs on copper products but not on refined metal.
Left on the table was the option of phasing in refined copper tariffs from next year. A decision is due by the end of June.
Minding the volatile gap
The CME premium over the LME price is smaller than this time last year, because back then traders were pricing in import tariffs of 50% to match those already imposed on aluminum and steel.
Trump’s July decision to exempt refined metal upended the trade. The CME premium imploded and the arbitrage eventually inverted, with LME even commanding a premium in the early months of 2026.
Now, the CME premium is back and widening once again.
The spot premium is a modest 3% of the LME price. But the March 2027 forward premium is close to $1,000 per metric ton, equivalent to 7% of the LME price.
Given the US administration has flagged the potential for phased tariffs of 15% from the start of 2027 and 30% from the start of 2028, there is clearly further upside to the CME premium.
Renewed tariff pull
Not that it matters too much for physical traders. The differential on the forward months is more than enough to cover the costs of shipping to the United States.
US imports dropped sharply in the closing months of 2025 as the tariff trade unwound.
But they’ve bounced back strongly so far in 2026. Inbound shipments more than doubled year-on-year to 533,000 tons in the first quarter, according to the World Bureau of Metal Statistics, which collects data from official customs figures.
More is on its way, judging by the renewed upward momentum in CME stocks, which now total 577,385 tons, accounting for 44% of global exchange inventory.
Even that tells only part of the story. LME copper stocks have also been migrating to the United States with 222,000 tons sitting at US ports in a combination of registered and off-warrant inventory.
Last week’s cancellation of 33,275 tons at New Orleans suggests metal is being prepared for customs clearance as the arbitrage yawns wider again.
Strategics stockpile
The US has over the last year or so built up its own strategic copper reserve thanks to the on-again, off-again threat of tariffs.
Including metal that is being stored off exchange, the stockpile is now likely over 1 million tons, not as large as that held by China’s state stockpile manager but bigger than any other country’s reserves.
Does the US need any more?
Probably not, but it’s not clear how the stock build will figure in Commerce Secretary Howard Lutnick’s thinking when he reports back to Trump at the end of June.
As with other metals tariffs, the stated aim is to reinvigorate US production capacity and in that regard the country still has only two primary copper smelters with no signs of that changing any time soon.
Thanks to last year’s import surge, the country’s import dependency rose to 57% from 45% in 2024, according to the United States Geological Survey.
On those metrics the case for tariffs looks strong given the parameters of the Section 232 national security investigation.
But as the copper market has found out to its cost, second-guessing the Trump administration is a hazardous business.
(Editing by Marguerita Choy)
