Copper stays range bound as US tariff uncertainty, oil inflation risks weigh

Copper prices remained stagnant in a limited range on Tuesday, as uncertainty surrounding potential US import tariffs and worries about higher oil prices possibly leading to inflation kept traders on edge, according to Reuters. The three-month copper on the London Metal Exchange rose slightly by 0.1% to $14,353 per metric ton by 0955 GMT, marking the third consecutive day of tight trading.

Copper has experienced a 55% increase since Donald Trump returned to the US presidency in January 2025, despite global demand falling by 0.5% to 27 million metric tons, as noted by Panmure Liberum analyst Tom Price in a report.

China's demand acts as a stabilizing factor for copper prices. A shortage of copper scrap in China has increased the country's reliance on refined copper, as drawn down from domestic inventories. Meanwhile, the US continues to import metal and stockpile ahead of potential tariffs. The Yangshan copper premium, a key indicator of China's demand for imported copper, climbed 0.7% to $138 per ton, reaching its highest level in almost four years.

Uncertainty about potential tariffs on refined copper keeps traders cautious. The White House has not yet decided on tariffs, with the administration focusing on affordability as they approach November's midterm elections, as reported by Reuters in September, citing sources familiar with the matter.

Chinese broker Everbright Futures indicated that cautious purchasing at elevated prices and uncertainty over US tariffs could keep copper prices within a narrow range in the near term. Copper inventories on the Comex reached a record high of 718,199 metric tons, up significantly from 87,241 metric tons in January 2025, reflecting the buildup of metal in the US.

Goldman Sachs anticipates copper prices to average $15,400 in 2027, compared to $14,700 at the end of 2026. Production declines at BHP Group and Anglo American, due to disruptions in Chile, reduced copper output by 19% and 5%, respectively. However, both companies maintained their guidance for full-year output. Among other LME metals, aluminium fell by 0.8% to $2,993, zinc declined by 0.7% to $3,688, while nickel increased by 0.5% to $15,600. Tin showed a modest gain of 0.1%, and lead remained steady.