Global Copper Shortages Deepen Amid U.S. Tariff-Driven Inventory Shift

Copper Tariff Threat Reshapes Global Trade Flows

The global copper market is facing growing imbalances as physical metal floods into the United States. This movement is driven by fears of incoming tariffs. This aggressive stockpiling has created regional shortages. As a result, London Metal Exchange (LME) inventories are at their lowest levels in nearly two years. Traders are rushing to deliver copper to the U.S. They are exploiting a widening price arbitrage between the Chicago Mercantile Exchange (CME) and the LME.

U.S. President Donald Trump’s administration initiated a Section 232 investigation in February. This sparked speculation over a potential 10% import tariff on copper. While the investigation officially has a 270-day review window, markets are pricing in a faster resolution. In the meantime, U.S. imports have surged to unprecedented levels. April alone brought in over 200,000 metric tons—the highest monthly figure in a decade. Year-to-date imports stand at 455,000 tons, which is more than double the same period in 2024.

Chilean copper has dominated recent shipments, accounting for up to 75% of imports in recent months. The CME’s limited good-delivery list favors Chilean producers. Therefore, the drawdown from LME warehouses was accelerated. Chilean stocks have plummeted from 25,150 tons in December to just 75 tons at the end of May.

Global Copper Inventories Collapse as U.S. Hoards Metal

The ripple effects of this U.S.-centric copper demand are being felt worldwide. Chinese imports of Chilean copper have dropped 44% compared to the same period last year. Meanwhile, suppliers like Australia, Belgium, Spain, Germany, and even China are redirecting metal—previously unseen in the U.S. market—toward American shores.

This massive redirection of copper has severely strained inventories across global exchanges. At the LME, over half of the 114,475 tons of headline stock is now canceled for physical delivery. Only 50,850 tons of live stock remain, with much of it comprising Russian and Chinese brands. LME off-warrant inventory has also declined sharply to 30,188 tons—down 20,300 tons since January.

At the same time, CME warehouse inventories have more than doubled this year. They now exceed 175,000 tons. The price spread between LME cash and three-month contracts has widened into a backwardation of nearly $90 per ton. This reflects physical tightness. Even China’s Shanghai Futures Exchange has entered backwardation territory.

SuperMetalPrice Commentary:

The copper market is now in a precarious state of supply divergence. The United States is anticipating protectionist measures and is soaking up global inventories. Meanwhile, the rest of the world contends with shortfalls. This imbalance won’t normalize until the Trump administration announces its tariff decision. Ironically, by the time any tariff is enforced, the U.S. may have already hoarded enough copper to significantly dampen import volumes. This could undermine the very revenue tariffs are intended to generate. Market participants should prepare for continued volatility and backwardation pressure until policy clarity returns.