Market Overview
Copper spent the week consolidating below US$14,100/t after last Thursday’s sharp reversal from a record US$14,875/t (US$14.88/kg), as the market priced a growing probability that the US refined-copper tariff will be delayed or shelved. Benchmark three-month LME copper opened the week at US$14,065/t (US$14.07/kg), down 1.2% on Monday, and touched US$14,018.50/t, its lowest since 20 August and 5.9% below the record. Last week was the first weekly loss since June, ending a ten-week winning streak.
The selling extended into Wednesday, when the Federal Reserve raised rates by 25 basis points with a hawkish tilt and COMEX copper printed an eight-week low near US$6.20/lb (about US$13,670/t, or US$13.67/kg). Prices then steadied: COMEX settled at US$6.4315/lb (US$14,180/t) on Wednesday and posted a third straight gain on Thursday at roughly US$6.45–6.54/lb (US$14,220–14,420/t), as traders shrugged off the Fed’s signal that a further hike may follow. Copper remains up about 12% year to date and roughly 40% year on year, so the retreat has trimmed, not erased, the 2026 rally.
The Tariff Trade Unwinds
The catalyst for the retreat was a Reuters report on 10 September that the White House’s Section 232 decision on refined copper had stalled over affordability concerns, with the administration wary of adding to input costs ahead of the mid-term elections. The proposal on the Commerce Secretary’s desk would impose a 15% duty on refined cathode from 1 January 2027, rising to 30% in 2028; the recommendation was due by 30 June and no decision has been announced. LME Insight’s read is the important one: the decision has stalled, it has not been cancelled, and the 50% duty on semi-finished products in force since August 2025 is untouched.
What changed is the arbitrage. In June Morgan Stanley noted COMEX trading about 6% above the LME, with the market pricing roughly a 43% probability of a 15% tariff by January 2027 and COMEX net-long positioning at an all-time high. By last Friday the COMEX premium had collapsed to about 1.4% (US$6.55/lb, or US$14,441/t, against LME at US$14,233/t), and this week COMEX has at times traded at or below London. That removes the pull that has drawn some 700,000 tonnes into US warehouses, and Morgan Stanley’s June scenario analysis is playing out: a delay is “modestly negative” for both benchmarks, whereas an outright cancellation would weigh on both more heavily.
The macro backdrop added a second weight. Wednesday’s 25 basis point Fed hike, hawkish projections with 16 of 18 policymakers seeing another move in 2026, a firmer dollar and US 10-year yields near 5% all weaken the case for a leveraged long in a metal already up 40% in a year. Brent above US$100/bbl and August PPI at 5.4% year on year keep the affordability argument that stalled the tariff very much alive.
Inventories and Physical Market: From Backwardation to Contango
The clearest signal that the squeeze has eased is the LME forward curve. The cash-to-three-month spread peaked at a US$436/t backwardation in mid-August, narrowed to US$151.50/t in late August and US$74.50/t by 4 September, flipped to a US$10.50/t contango at last Friday’s close and widened to a US$36/t contango on Monday. A backwardation means buyers pay a premium for prompt metal; a contango means nearby copper is now cheaper than forward copper, so the market is no longer paying up for immediate delivery. That is what a stalled tariff does: the incentive to pull cathode out of LME sheds and ship it to the US has gone, and metal is starting to come back.
LME stocks confirm it. Warehouses posted a 9,600 tonne inflow on Monday, including 4,550 tonnes in Italy, the largest arrivals in almost four weeks, lifting headline stocks from 234,475 tonnes at last Friday’s close, although almost half remain cancelled warrants. COMEX stocks ended a run of 58 consecutive daily increases stretching back to mid-June, dipping to 767,504 short tons (696,268 tonnes). With the arbitrage closed, ING’s earlier scenario work suggests inflows to COMEX slow rather than reverse, since metal already in US warehouses is unlikely to leave quickly; any reversal would start with transfers from COMEX to nearby LME facilities. The one region still tight is China, where SHFE stocks fell 13% last week to 54,780 tonnes, their lowest since January 2024. The physical market is therefore easing in London and New York while Shanghai remains thin, and the contango tells us the premium for tariff-driven urgency has, for now, been priced out.
Supply and Demand Signals
The retreat is a repricing of policy, not of mine supply, which has if anything worsened. Chile produced 403,424 tonnes in July, its weakest July since 2011, and Cochilco expects 2026 output to fall 2.6% to 5.27 million tonnes as Escondida grades slide. Goldman Sachs has cut its 2026 global mine supply forecast by about 350,000 tonnes, with Grasberg and Kamoa-Kakula not back at full capacity until 2028, and treatment charges remain near zero. Goldman’s ex-US deficit of 640,000 tonnes in 2026 sits close to Morgan Stanley’s roughly 600,000 tonne view; the ICSG’s global figure is a more modest 150,000 tonnes.
Demand is the softer leg. China’s refined and concentrate imports both fell about 10% year on year in August, rod mills are running near 62% of capacity, and retail sales, investment and house prices all disappointed. The US has already stockpiled more than a year of normal imports, so its buying slows whatever the tariff outcome. The structural case is intact, with Goldman expecting more than 60% of demand growth to 2030 from grid and power infrastructure, and US$14,000/t (US$14.00/kg) still sits well above the incentive price for new supply. The risk to price now runs through Washington and Beijing rather than through the mines.
Market Outlook
Cross-referencing the sources, the base case for the next three to four weeks is a range of US$13,600–14,400/t (US$13.60–14.40/kg), with US$14,000/t as the pivot. Trading Economics’ end-quarter model sits at US$6.50/lb (US$14,330/t), Skillings’ base case is US$14,000–14,400/t, Goldman’s end-2026 target of US$13,735/t implies modest further drift, and the pullback zone we flagged last week, US$13,600–14,100/t, has so far held with a low of US$14,018.50/t. Bloomberg’s reporting this week that copper steadied despite the hawkish Fed suggests the policy premium has largely been paid out and the market is now trading the fundamentals.
Two scenarios frame the tails. If the White House formally rejects the refined-copper tariff, or the silence stretches into October, the remaining COMEX premium and speculative length unwind and a test of US$13,000–13,400/t (US$13.00–13.40/kg) is likely, in line with Skillings’ bear case and J.P. Morgan’s fourth-quarter forecast of US$12,500/t. If a 15% tariff from January 2027 is confirmed, Citi’s US$15,000/t (US$15.00/kg) year-end target and Goldman’s tariff-case view of prices above US$14,000/t in the second half come back into play, and the backwardation would return quickly. Morgan Stanley’s framing remains the most useful guide: a delay is modestly negative, cancellation is bearish for both benchmarks, confirmation is bullish for both. Watch the Federal Register rather than the newswires; only a proclamation or a White House fact sheet settles the question. Twelve months out, the sources still converge on higher prices, with Trading Economics at US$7.10/lb (about US$15,650/t) and Goldman at a US$13,800/t 2027 average, because the mine supply deficit does not depend on the tariff.
| Organisation | Outlook | Key driver |
| Goldman Sachs | US$13,735/t (US$13.74/kg) end-2026; US$13,800/t average 2027; above US$14,000/t if tariff confirmed | 350kt cut to 2026 mine supply; 640kt ex-US deficit; grid and power demand |
| Morgan Stanley | About 600kt deficit in 2026; delay modestly negative, cancellation bearish, confirmation bullish for both benchmarks | Tariff decision as key risk event; COMEX net-long at record |
| Citi | US$14,500/t 0–3 months; US$15,000/t year-end; US$17,000/t upside | Supply constraints; AI and grid demand |
| J.P. Morgan | US$13,000/t Q3; US$12,500/t Q4 2026; support US$11,100–11,200/t | Macro and oil-price risk; Chinese dip-buying |
| Wood Mackenzie | US$13,200–13,800/t (unchanged from last week) | Supply disruption; electrification demand |
| CRU | At best a balanced market outside US stocks (unchanged) | US import pull; smelter cuts |
| Trading Economics | US$6.50/lb (US$14,330/t) end-Q3; US$7.10/lb (US$15,650/t) in 12 months, cut from US$14,640/t and US$15,960/t last week | Tariff delay; Fed tightening |
| ICAA base case | US$13,600–14,400/t (US$13.60–14.40/kg) over the coming month | Tariff stall priced; contango; China thin |
ConnectOre
A week in which the forward curve flipped from backwardation to contango is a reminder that price signals in copper are as much about logistics and policy as about ore in the ground. ConnectOre brings together the data, research and industry expertise that let members read those signals early, from exchange stocks and spreads to mine-by-mine supply. Go to: connectore.org
Sources
Reuters, 10 September 2026: White House copper tariff plan stalls amid affordability concerns; Reuters, 14 September 2026: Copper sinks to 3-week low as dollar firms, LME stocks rise; Bloomberg, 17 September 2026: Copper steadies as traders shrug off Fed’s hawkish rate signals; Bloomberg via MINING.com, 19 June 2026: Trump’s copper tariff decision hangs over global metal market; Trading Economics: Copper, updated 17 September 2026; LME Insight: Weekly Review 7–11 September 2026; LME Insight: Weekly Review 1–4 September 2026; Goldman Sachs 1 June 2026 note via Scottsdale Mint; Morgan Stanley, 8 June 2026: US copper tariff decision as key risk event; J.P. Morgan Global Research: Copper outlook, 24 April 2026; ING Think: What’s next for US copper import tariffs; Skillings, 14 September 2026: Copper price forecast 2026; Rio Times, 14 September 2026 and 17 September 2026; ABC Money, 10 September 2026: Copper tariff stall claim outruns the paper trail; ICAA Copper Weekly Brief, week ending 11 September 2026. Wood Mackenzie and CRU outlooks are carried forward from last week’s brief; AFR, FT, NYT and The Economist could not be accessed this week.