Copper: Tariff risks keep spreads elevated – ING

§ 01 Executive Snapshot

• What: LME copper prices are near record highs due to tariff risks and supply tightness.
• Who: ING’s Commodities Strategist Ewa Manthey, US Commerce Secretary, President Donald Trump.
• Why it matters: Tariff outcomes will significantly influence copper market dynamics and pricing structures.

§ 02 Key Developments

• LME copper is trading near record highs, with prices up around 10% year-to-date.
• The COMEX-LME spread has widened to around $400/t, reflecting the market's pricing of tariff risks.
• ING forecasts a global copper market deficit of around 35kt in 2026 due to mine supply losses and sustained demand.

§ 03 Strategic Context

• Historical supply tightness in copper has been exacerbated by geopolitical tensions and macroeconomic factors affecting demand.
• The impending US tariff decision will shape market expectations and inventory visibility in the copper sector.

§ 04 Strategic Implications

• Immediate market consequences include potential price volatility depending on the tariff announcement outcome.
• Long-term implications may involve shifts in global supply chains and pricing structures between COMEX and LME copper.

§ 05 Risks & Constraints

• Regulatory risks associated with the US tariff decision could lead to abrupt market adjustments.
• Competition from alternative copper sources and geopolitical tensions may further impact supply availability.

§ 06 Watchlist / Forward Signals

• The US Commerce Secretary's recommendation on tariffs is expected by 30 June.
• Future developments include monitoring the tariff announcement's impact on copper spreads and inventory levels.