US Tariff Fears Drive Copper Stockpile Rush

Tariff threat drives copper inflows

Uncertainty surrounding US trade policy continues to drive the rush.

The US Commerce Department was scheduled to deliver a copper market report to the White House by June 30.

The review will determine whether the administration proceeds with a 15 percent tariff on refined copper starting in January 2027, which could escalate to 30 percent by 2028.

With the looming escalating tariffs, the excess copper in US warehouses could serve as a critical domestic reserve rather than triggering a rapid destocking cycle.

This mass relocation of copper has altered the physical market balance. As reported by Reuters, CRU originally projected a 639,000-ton global copper surplus for 2026. Assuming the metal stockpiled in the US remains trapped, analysts now view the market as balanced at best.

Market participants expect the metal to remain stranded in the US, as the costs involved erase the financial incentive to re-export. Copper currently stored in Comex warehouses is already duty-paid.

Glencore (LSE:GLEN,OTCPL:GLCNF) CEO Gary Nagle noted prices will likely fall once a final tariff decision is announced, regardless of the exact duty rate, simply because it will eliminate current uncertainty.

"You'll have these high stockpiles in the US, which over time will be drawn down for use ... not to be exported again," Nagle said in the company’s recent earnings call.

Mine outages, bottlenecks compound supply constraints

The tariff threat also builds on supply chain fractures already faced by the industry.

The closure of the Strait of Hormuz following the US-Israel war with Iran paralyzed shipments of sulfuric acid, a critical input for copper processing. Prices for the chemical surged to US$820 per metric ton in the Middle East and up to US$1,200 in import-dependent regions like Brazil.

Simultaneously, major mine disruptions constrain raw output. Chile, the world’s top producer, recorded a 9 percent production drop in the first quarter, largely due to ongoing recovery efforts at Codelco's El Teniente mine following a fatal collapse in August 2025.

Major sites including Freeport-McMoRan's (NYSE:FCX) Grasberg operation in Indonesia and the Ivanhoe Mines (TSX:IVN,OTCQX:IVPAF)-Zijin Mining Group (HKEX:2899,SHA:601899,OTCPL:ZIJMF) Kamoa-Kakula joint venture in the Democratic Republic of Congo continue to operate below full capacity.

Adding to the supply anxiety, the DRC recently imposed an immediate export ban on copper and cobalt concentrates on August 6.

As a result, LME warehouse stocks plunged from 401,000 metric tons in early May to 214,550 metric tons. This shortage directly collides with the growing demand for artificial intelligence (AI) data centers, grid expansion, and electric vehicle manufacturing.