Since the start of 2026, the central trading range for the main Shanghai copper contract has gradually shifted higher, and since September it has been trading near 110,000 yuan per tonne. In the author's view, the current copper price embeds a certain policy expectation premium: stockpiling behavior driven by expectations of US import tariffs has left copper inventories and spot supply outside the United States relatively tight.
Looking back, US copper stockpiling can be traced to the second half of 2024, when COMEX copper inventories accumulated excessively in the fourth quarter, rising by nearly 30,000 tonnes in total. In January 2025, the market expected the United States to impose tariffs on electrolytic copper, and COMEX copper shifted to a premium over LME copper, a market that had long traded at parity. The price gap between the two locations encouraged traders to ship electrolytic copper from outside the United States to the US mainland. This phenomenon appeared intermittently in 2025 and 2026, ultimately leading to an imbalance in global visible copper inventories and intensifying the mismatch in inventory levels and supply-demand structures between the United States and the rest of the world.
On one hand, the United States currently holds about 78% of global visible copper inventories, yet its electrolytic copper consumption in 2025 accounted for only 5.8% of the global total, a severe mismatch between inventories and actual demand. On the other hand, visible copper inventories outside the United States account for about 22%, near the low 16th percentile of the past five years, and inventory liquidity is hard-pressed to meet enormous market demand. As a result, in August and September 2026, LME copper spot and domestic electrolytic copper spot successively showed high premium structures rarely seen in recent years.
The market's previous mainstream expectation was that the United States would announce the result of its electrolytic copper import tariff policy by the end of September, but as of mid-October the policy remained undecided. On September 10, according to reports, the White House had yet to decide on a refined copper tariff, with officials weighing the potential benefits of encouraging domestic mining against the risk that higher copper prices could push up manufacturing costs. Expectations of a US tariff increase eased, and LME copper prices paused their rally after hitting a record high. Because immediate implementation, delayed implementation, and failure to materialize would each affect copper prices differently, the continued pending status of the tariff policy has left copper prices without a clear direction, and after September 10 copper prices remained in a range-bound pattern.
From the perspective of policy objectives, the reason the US copper tariff policy has yet to be clarified may be that its goal of promoting the rebuilding of US smelting capacity is difficult to achieve. First, insufficient long-term stability of tariff policy weakens expectations for long-term investment returns, making it hard to genuinely mobilize industrial capital investment. The policy is essentially an administrative means of capturing downstream end-user benefits to subsidize returns in midstream smelting and processing links and promote midstream industry development, and such industrial policy may be difficult to sustain over the long term. Second, the core bottleneck in the United States is currently smelting capacity constraints, not copper trade issues. Imposing tariffs on electrolytic copper amounts to taxing a raw material structurally necessary for the US economy, and it cannot quickly make domestic US smelting capacity meet demand. The United States has only two operating smelters, and even if US copper prices rise, plants cannot rapidly increase output because of capacity ceilings. Finally, the added tariff costs would be passed directly to downstream end users, harming the interests of related enterprises.
In summary, whether and how to implement the tariff policy requires weighing pros and cons on multiple fronts. Current tariff policy expectations have pushed up global copper prices through continued US stockpiling, and the policy may have fallen into a dilemma, with the US government's assessment result still pending.
From the current copper fundamentals, the supply side remains tight while demand is somewhat suppressed. On the copper ore side, global copper mine output from January to July 2026 totaled 13.345 million tonnes, down 0.34% year on year, the first year-on-year decline in recent years. Among that, Chile's copper mine output fell notably, down 6.9% year on year over the January-July period. On the smelting side, in the first half of 2026, positive cash flow profits could still be maintained against the backdrop of continuously rising sulfuric acid prices, but in the second half, as sulfuric acid prices and copper concentrate TC/RC treatment and refining charges fell in tandem, spot smelting profits turned negative. China's electrolytic copper output in July, August, and September fell 4.04%, 2.09%, and 0.04% year on year respectively, declining for three consecutive months and marking the first year-on-year decline in nearly five years. With raw material supply tight and smelting profits under pressure, the growth rate of electrolytic copper output is expected to be limited going forward.
On the demand side, copper prices adjusted in the second quarter of 2026, and suppressed end-user demand since the fourth quarter of 2025 was substantially released, with global electrolytic copper consumption and China's apparent consumption rising 3.83% and 4.35% year on year respectively from March to June. Since the third quarter, however, demand has weakened to a certain extent as the center of copper prices moved higher, and China's apparent electrolytic copper consumption fell 3.96% year on year in July and August.
Overall, as the US tariff policy remains pending, copper prices outside the United States have to some extent returned to fundamental pricing, but current copper prices still exert a certain dampening effect on end-user demand. The author holds a cautious view on whether the tariff policy can achieve the goal of promoting the rebuilding of US smelting capacity. Current copper prices embed a certain policy expectation premium, and different tariff policy scenarios would affect copper prices differently, so it is advisable to continue watching the pace of US tariff policy progress.
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