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| LME Copper |
LME-US Price Gap Widens to $1,500 as Traders Front-Run Potential Import Tariffs
Copper prices in the US surged this week, widening the US-LME copper price gap to a staggering $1,500 per tonne. The surge follows speculation about upcoming US import tariffs on copper, with buyers accelerating pre-emptive procurement. Copper for September delivery on the Comex jumped over 3% to $11,367 per tonne—its highest level since March's historic peak.
Tariff Anxiety Fuels US Demand Spike
US market activity surged after the White House directed the Commerce Department to explore protective tariffs on copper. The investigation, triggered in February, has ignited anticipatory stockpiling by domestic manufacturers and traders. As a result, US prices outpaced the London Metal Exchange (LME), where benchmark 3-month contracts rose more modestly by 1.7% to $9,888 per tonne.
Meanwhile, this divergence in prices has incentivized global exporters—especially from China—to ramp up shipments toward the US. The strategic shift underscores how tariff expectations are actively reshaping copper trade flows.
Goldman Sachs Sees Short-Term Gains, Medium-Term Pullback
In contrast to the surging US market, LME copper remains under tighter but steadier conditions. Goldman Sachs forecasts that LME prices could peak near $10,050 per tonne in August, citing tightening supplies outside the US. However, analysts also expect copper to fall below $10,000 once the proposed 25% US tariffs take effect, potentially by September.
Ready-to-ship copper inventories on the LME have dropped nearly 80% this year, fueling steep backwardation. However, recent Chinese smelter exports have eased near-term premiums. The cash-to-three-month spread narrowed to $94 per tonne from $280 earlier in the week, suggesting some relief in tightness.
Price Volatility Remains a Central Risk in 2025
Despite current highs, copper has faced wild price swings throughout 2025. After hitting record levels in March, it dipped dangerously close to $4.00 per pound in April. Yet, the metal remains up over 25% year-to-date, reflecting persistent optimism in long-term electrification demand and critical mineral policy support.
As a result, market players remain cautious. Supply chain managers, metal hedgers, and institutional investors now monitor both macroeconomic shifts and tariff policy developments more closely than ever.
ScrapInsight Commentary
The widening US-LME copper spread signals growing regional price dislocations driven by policy uncertainty. If US tariffs are confirmed, short-term US prices may spike further, but risk a steep correction by Q4. For the recycling sector, this offers a temporary margin expansion window, especially for domestic scrap suppliers positioned to fill import gaps.
