Copper trade faces shake-up as U.S. tariffs set to trigger inventory glut

Published 11/07/2025, 19:36
© Reuters.

Investing.com -- U.S. copper imports are set to plunge in the coming months as a wave of front-loaded shipments leaves the country with excess inventory ahead of a 50% tariff taking effect on August 1, according to UBS.  

U.S. imports of refined copper jumped by roughly 400,000 tonnes year-to-date, a 130% surge from last year. With domestic demand largely flat, UBS estimates 500,000 to 700,000 tonnes of that volume will remain in storage—covering up to 40% of the U.S.’s annual needs.

Imports are likely to remain strong through July, the analysts said, but once the tariff kicks in, the U.S. is expected to draw down this excess inventory rather than keep importing.

The U.S. accounts for less than 10% of global refined copper demand, but the anticipated tariffs have distorted global trade flows, UBS said.

As traders chased the premium between U.S. and London copper prices, copper was diverted from major markets like China and Europe, leading to tighter supply in those regions.

The firm expects some of the surplus copper to be delivered onto Comex to benefit from the premium, though the gap between Comex and LME prices—now 25-30%—is expected to narrow once inventories are absorbed.

UBS said refined copper flows into the U.S. from key exporters like Chile and Canada—now above 200,000 tonnes per month—are likely to be rerouted to other markets. Meanwhile, global visible inventories, while rising slightly in recent months, remain within normal levels.

UBS recently downgraded shares of Freeport-McMoRan (NYSE:FCX), Southern Copper (NYSE:SCCO) and Lundin to Neutral and KGHM to Sell, citing a more cautious near-term copper outlook. It remains constructive longer term, recommending Antofagasta (LON:ANTO), Anglo American (JO:AGLJ) and Zijin.

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