Global copper market inventory flows have undergone structural shifts amid supply constraints and potential tariff expectations, with deliverable resources in non-US regions tightening at one point. Since late August, COMEX copper futures have climbed steadily, reaching an all-time high of 689.4 cents per pound (approximately $15,197 per metric ton) on September 9. LME three-month copper futures also surged, touching a record $14,875 per ton. Since September 10, international copper prices have pulled back sharply. The spread between COMEX and LME copper has narrowed from $783 per ton on August 25 to $62 per ton on September 15, a contraction of roughly 92%.

Markets that had previously benefited from notable demand premiums have experienced more pronounced declines during the subsequent price correction phase.

Cross-Market Arbitrage Dynamics

In August 2025, the US imposed tariffs of up to 50% on imported semi-fabricated copper products, while refined copper received a temporary exemption. Market participants had widely expected the US Section 232 investigation to cover refined copper. Under this anticipation, a cross-market arbitrage mechanism emerged: traders bought LME copper, took delivery in non-US regions, shipped it to the US by sea, and sold it after registering as COMEX warehouse receipts. As long as the COMEX-LME spread covered international logistics and related costs, copper resources continued flowing into the US market, reducing deliverable inventories in non-US regions and supporting the COMEX premium. On September 10, with no final decision on US tariff policy, market expectations for tariffs on refined copper weakened, and the COMEX premium subsequently narrowed.

Persistent US Inflation Pressures

Rising US inflation has weighed on the overall valuation of commodity markets. The US August Producer Price Index (PPI), released on September 10, rose 5.4% year-over-year, indicating persistent upstream price pressures. On September 11, the US August core Consumer Price Index (CPI) rose 0.3% month-over-month, exceeding the market consensus of 0.2% and marking the largest monthly increase since April. High inflation has prompted financial markets to reassess the Federal Reserve's future monetary policy path, with rate hike expectations strengthening and both the US dollar index and real interest rates moving higher. Since international commodities are predominantly priced in US dollars, the rise in the dollar and real rates has exerted downward pressure on commodity prices, including COMEX copper.

Shifting Demand Expectations

Changes in industrial demand expectations have had a temporary impact on copper prices. With the advancement of artificial intelligence technology, data centers—as core carriers of computing infrastructure—have increased copper consumption in power distribution systems, high-speed copper cable interconnections, and liquid cooling solutions, drawing significant attention to long-term incremental copper demand. Recently, leaders from prominent AI companies including Anthropic have voiced concerns about safety risks in frontier models, proposing adjustments to the pace of model development and iteration. This tech-sector commentary has prompted capital markets to reassess the pace of computing infrastructure construction and related supply chain expansion, leading to more rational expectations for copper demand growth from data center construction—a factor that has contributed to the recent pullback in COMEX copper futures from a demand perspective.

Positioning Trends

From a positioning perspective, non-commercial net long positions in COMEX copper futures rose to elevated levels above 90,000 contracts in the week ending September 8, indicating concentrated speculative long positioning. With increased positioning concentration, copper prices have become significantly more sensitive to capital flows. When the incremental capital driving price appreciation slowed and no new bullish catalysts emerged, some profit-taking positions exited to hedge against potential volatility risks, prompting a notable short-term correction in COMEX copper futures.

Supportive Factors Remain Intact

Despite the interim pullback, medium-to-long-term factors supporting copper prices remain in place. On the raw materials front, copper concentrate treatment charges (TC) continue to hover at low levels. In the week of September 11, the spot TC index for 25% grade copper concentrate stood at -$211.7 per ton, down from -$172.9 per ton in early August. Meanwhile, 2026 long-term contract TCs remain at extremely low levels, reflecting tightening raw material supply pressures facing the smelting segment. Supply constraints are expected to continue underpinning copper prices.

On inventories, regional divergence persists globally. As of September 11, visible copper inventories across the three major exchanges totaled more than 990,000 tons. COMEX copper inventories stood at approximately 766,000 short tons (around 696,000 metric tons), accounting for about 70% of the total, while non-US copper inventories totaled roughly 297,000 tons (LME at approximately 242,000 tons and SHFE at about 55,000 tons). The pattern of concentrated North American inventories alongside relatively tight non-US inventory levels provides the physical backdrop for the recent cross-market spread adjustment.

Summary and Outlook

Since September, copper prices have surged and then retreated, reflecting a price correction driven by the interplay of policy expectations, inflation data, and positioning structures. Although interest rate expectations have intensified short-term copper price volatility, supportive factors—including low copper concentrate TCs and tight non-US visible inventories—remain intact. Looking ahead, two key factors warrant attention. First, the impact of Middle East tensions on energy prices such as crude oil. If oil prices remain elevated, production and transportation costs for industrial metals will rise, providing cost support while also fueling inflation expectations that could influence the interest rate environment. Second, shifts in the regional distribution of global visible copper inventories, as changes in regional inventory allocation will directly affect cross-market spread trends. This article is for reference only; market participation carries inherent risks.