Copper prices ease as traders digest tariff impact, inventory surge

• COMEX accounts for over half of exchange inventories
• Indian buyers may benefit from softer input costs going forward

Copper prices on the London Metal Exchange (LME) edged down 1.7% w-o-w, with the 3-month contract settling at $9,633/t on 1 August 2025. The decline reflects growing market caution following the US’s decision to impose a steep 50% tariff on a wide range of semi-finished copper products. While raw materials such as cathodes, anodes, and scrap are exempt, the tariffs still represent a major shake-up for global trade flows.

In anticipation of the tariff, US buyers rushed to frontload imports, leading to a surge in COMEX warehouse stocks. As of July-end, COMEX inventories had reached 234,204 t—more than double January levels, and the highest seen since 2017. For the first time, COMEX now accounts for over half (55%) of total visible copper exchange inventories, surpassing the LME’s usual dominance.

On the LME side, inventories also saw a rebound from a low of 105,000 t in late June to over 141,000 t by early August adding to near-term supply pressure. In contrast, stocks at China’s SHFE have stayed relatively low, pointing to continued tightness in the domestic Chinese market.

At the same time, global copper production remains constrained. Key mines across Chile, Indonesia, and the Democratic Republic of Congo are battling disruptions due to labour unrest, environmental challenges, and regulatory delays. In Chile alone, output is down 350,000 t year-to-date. The DRC’s Kamoa-Kakula mine cut output by 28%, while the US-based Pinto Valley mine saw a 37% drop in Q2 production due to water shortages and lower ore quality.

Despite supply challenges, the current rise in visible inventories and weaker demand signals—especially from construction and electronics sectors—are putting a cap on price recovery. Market participants now await signs of how much surplus material in the US will be re-exported or shifted to other exchanges, which could weigh on prices further.

J.P. Morgan has revised its forecast, expecting LME copper to average $9,100/t in Q3 2025, down from $9,480 in the previous quarter. Indian copper buyers, who use LME prices to benchmark local trades, may benefit from softer input costs. However, exporters of value-added copper products could face margin pressure if global buyers lower their bid prices in line with falling benchmarks.