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| COMEX Copper |
COMEX copper price disconnect reveals speculative risks, trade flow distortions
Copper, a key input for construction, energy, and EV sectors, recently experienced sharp volatility on the COMEX. The COMEX copper price surged in July due to fears of new U.S. tariffs but fell rapidly when cathode was excluded. This sequence highlights deep structural fragility in the U.S. copper market, where sentiment, not supply, drove price.
Speculation, not physical demand, drove copper spike
In early July, U.S. markets reacted to former President Trump’s Section 232 tariff announcement, assuming copper cathodes would be taxed. As a result, COMEX copper diverged from the LME price by over $1.25/lb. David Brooks of Argus confirmed that traders flooded the U.S. with cathode, fearing constrained supply. However, the actual tariff applied only to copper products, not cathodes—prompting a swift COMEX correction.
U.S. cathode inventories rose from 40,000 tons to 300,000 tons in one month, but this was a domestic reshuffling, not a global surplus. CME added a new New Orleans warehouse, further inflating visible stocks. Despite this, long-term fundamentals remain bullish due to rising demand from EVs, AI data centers, and energy infrastructure.
Supply chain adaptation and scrap market resilience
Germany-based Aurubis, launching its $800M U.S. smelter in Georgia, sees long-term value despite short-term price chaos. Commercial Director Naveed Moghadam described severe disruption for scrap suppliers reliant on COMEX pricing. Export-capable suppliers fared better, balancing with LME hedges.
Aurubis aims to capture diverse copper scrap streams like “zebra” (shredded reds), PCB material, and insulated wire. Its advanced assay systems support flexible intake, reducing rejections. The firm sees reshoring, low U.S. energy costs, and growing demand as strategic advantages.
Meanwhile, Recyera of Kentucky is pioneering fine-particle separation and tunable feedstock technologies. CEO Joshua Werner emphasized scalable refining tech and feedstock flexibility, supporting domestic circular economy goals.
Geopolitical friction impacts copper scrap flow
China’s 34% tariff on U.S. copper scrap in April widened the discount between scrap and COMEX prices. However, Brooks noted that U.S. exports are reaching China indirectly via Japan and Korea, narrowing discounts from 60 cents to 20–30 cents per pound.
This suggests resilience in copper scrap trade routes despite political headwinds. The flexibility of secondary metal flows contrasts with primary market volatility, underlining the importance of diversified downstream strategies.
ScrapInsight Commentary
The recent COMEX copper volatility underscores how tariff misinterpretation can distort market behavior. While long-term demand remains robust, short-term price signals are vulnerable to non-fundamental triggers. As U.S. reshoring accelerates, domestic smelting capacity—like Aurubis’ Georgia facility—will become vital in stabilizing scrap demand and reducing arbitrage shocks. Regulatory clarity and strategic inventory management will be critical to mitigating future volatility in the U.S. copper market.
