By Pratima Desai
LONDON, Oct 14 (Reuters) - President Donald Trump’s tariff threat helped to build copper stockpiles of more than 1 million metric tons in the United States without spending public money, but the flow is slowing as traders await a decision on the levies.
The prospect of levies has left Comex-approved warehouses in the United States holding roughly 70% of the world's visible copper stocks. This has created shortages elsewhere, fuelling a price surge despite a global surplus.
"Only traders
are making money. There are cheaper ways they could have got the copper. They could have quietly collected metal around the world from the off-exchange market," said Panmure Liberum analyst Tom Price.
Whether and when tariffs are imposed on US imports and whether the possibility will keep attracting copper will be a key talking point at LME Week, the industry's annual gathering in London, starting on October 18.
Traders have been shipping copper to the United States since Trump ordered a study on the potential for tariffs in February last year, which pushed Comex prices to record highs, reaching $6.83 a lb, or $15,057 a ton, on September 22.
This created a positive arbitrage — a price gap — in favour of Comex over London Metal Exchange copper, once costs including freight and insurance were stripped out.
The arb hit a record peak above $3,000 a ton in July last year. Since then, it has been high enough to make shipping copper to the United States profitable, but not always. The arb is now about $310 a ton.
"The US built a copper stockpile without spending taxpayer money, with policy and an almost existential threat of import levies," said Wood Mackenzie analyst Charles Cooper.
"But the arbitrage has collapsed, so the incentive to keep moving metal to the US is much weaker right now."
JANUARY DECISION DEADLINE LOOMS
The US Commerce Department was due to report on the domestic copper market by June 30 so Trump could decide whether to impose a 15% tariff on refined copper imports from January 1, 2027, rising to 30% in 2028.
But no decision has been announced.
One scenario Macquarie analyst Alice Fox sees as most likely is that the January deadline passes without a decision, leaving the question of tariffs unresolved.
"This would likely see the arb come off in the short term but then return to current levels ... not quite high enough to encourage additional metal, but high enough to keep metal in the US," Fox said.
Macquarie estimates that copper stocks in the United States on and off exchange now total about 1.6 million tons.
Since the end of February last year, Comex copper stocks have climbed nearly 750% to more than 714,000 tons.
Copper stored in LME warehouses in New Orleans and Baltimore have jumped 44% since mid-August to nearly 130,000 tons.
Comex, Shanghai Futures Exchange and LME copper stocks overall total more than 1 million tons.
LARGE SURPLUS IN THE US
The US now has vastly more copper than it needs, which Panmure Liberum's Price expects to amount to 1.6 million tons this year.
Numbers from information provider Trade Data Monitor show that the US imported more than 1.62 million tons of copper last year, up 80% from 2024.
US Geological Survey pegged US production at 1 million tons last year, which leaves the US with a surplus. Analysts expect a similar picture this year.
For excess metal to be exported, prices on the LME and the Shanghai Futures Exchange would need to be significantly above those on Comex. This will happen only when shortages outside the United States become critical.
"When traders see surpluses in the US and severe shortages, copper prices in the US and on the LME will be priced accordingly," said Price.
(Reporting by Pratima DesaiEditing by David Goodman)
