Copper Smashes Records on US Tariff Fears
Edward LawsonCopper surged past $13,000, propelled by US tariff fears creating a global supply drain and market scramble.
Copper prices have blown past the $13,000 per ton mark for the first time, extending a powerful rally as investors bet on an intensifying global supply squeeze.
Three-month futures in London surged to a record high of $13,253 a ton on Tuesday, climbing as much as 2% and eclipsing the peak set just one day prior. The explosive move is being driven by concerns that the Trump administration could impose new tariffs on refined metal, prompting a massive flow of copper inventories into the United States and leaving other regions facing a potential shortage.
How US Policy is Draining Global Supply
The core of the rally centers on market inventory. A plan to revisit import levies has caused US copper prices to trade at a premium, creating a powerful incentive for traders to ship metal there. This dynamic effectively locks up supply that would otherwise be available to the global market.
"Inventories used to act as a buffer, but now they're locked in the US," explained Li Xuezhi, head of research at Chaos Ternary Futures Co. "So the buffer is gone and everyone will have to scramble."
This isn't a new phenomenon. President Donald Trump triggered a similar rush to ship copper to the US in the first half of last year before ultimately exempting the metal from tariffs. The trade has now revived, with US copper imports in December climbing to their highest level since July.
A Rally Across Base Metals
Copper's ascent is part of a broader surge in industrial metals that has marked a strong start to 2026. The LMEX Index, which tracks the six main base metals, has climbed to its highest point since March 2022.
The red metal, essential for electrical wiring and cables, has now gained over 20% since late November. Aluminum has also rallied, hitting its highest price in more than three years.
Market Bulls Take Control
The combination of potential US import restrictions and strong demand forecasts has fueled a wave of optimism. Copper is a critical component in high-growth sectors like renewable energy infrastructure, data centers, and power grids.
Kostas Bintas, head of metals at Mercuria Energy Group Ltd., warned in a November interview that the rush of imports into the US would drain supply from the rest of the world, predicting "this is the big one" for bulls.
Goldman Sachs Group Inc. echoed this constructive outlook in a January 5 note, stating that it expects current strong pricing to hold firm due to limited supply growth. The bank also noted that demand remains robust, reporting that "feedback from Chinese downstream sectors suggested no notable destruction on orderbooks amid high pricing."
Li of Chaos Ternary Futures advised that the underlying logic driving the price action remains intact. "We need to track the trend and not get fixated on absolute price levels," he said.
As of 10:57 a.m. in Shanghai, copper was trading at $13,207.50 a ton, up 1.7%, following a gain of more than 4% on Monday.
