Copper futures in the US remained below $4.60 per pound on Monday, continuing the pullback from the previous week and notably underperforming other base metals amid shifting market dynamics.
Copper holds recent underperformance
This softer performance is largely attributed to an abundant supply of physical copper flowing into the US, which effectively erased the metal’s traditional premium in North America. Strong ore output from key South American producers—particularly Chile and Peru—has been a major factor in this surplus. Reflecting this, the International Copper Study Group recently doubled its forecast for this year’s copper surplus to nearly 300,000 tonnes, signaling a notable shift in market fundamentals from tight supply concerns to growing oversupply risks.
As a result of the anticipated glut, foreign traders increasingly moved to close out long positions on US copper futures, many of which had been established after former President Trump announced an investigation into copper imports with the potential for new tariffs. This move initially supported prices by raising fears of supply restrictions.
US copper inventories surged sharply
However, as those fears have eased, the market has adjusted accordingly. Simultaneously, US copper inventories have surged sharply, with metal shipments returning to American factories as importers sought to stockpile ahead of possible tariffs, effectively insulating themselves from potential levy risks. This increased physical supply narrowed the spread between US copper futures and their London Metal Exchange counterparts, reducing arbitrage opportunities that previously favored US contracts.
While the White House has recently engaged in efforts to negotiate trade agreements with major partners in an attempt to stabilize global supply chains, the Department of Commerce’s probe into imposing tariffs on copper imports remains ongoing. This uncertainty continues to weigh on market sentiment, contributing to subdued price momentum. Traders and industry watchers will be closely monitoring developments in both the trade discussions and supply-demand fundamentals as these factors will likely dictate copper’s near-term trajectory amid a backdrop of broader commodity market volatility.
