Morgan Stanley analysts have highlighted the impending US decision on refined copper import tariffs as a pivotal risk for copper markets. US authorities face a deadline of June 30 or July 1 to determine whether to apply a 15% tariff on refined copper imports starting January 1, 2027, a levy that could be raised to 30% in 2028.
The bank estimates that if the tariff is announced ahead of implementation, the COMEX copper price - the United States-delivered benchmark - could trade roughly 15% above the London Metal Exchange (LME) benchmark. COMEX is already trading about 6% higher than the LME, and that spread has been prompting market participants to ship copper into the US in anticipation of possible policy changes.
Morgan Stanley quantified the extent of US importing to date. The US has over-imported 260,000 metric tons of copper year-to-date, which, when annualized, represents 2.6% of global demand. The bank also noted that US inventories now hold more than one year of normal refined copper imports.
The analysts placed the US situation in the context of existing trade measures. A 50% import tariff is already applied to aluminum, steel, and most imports of semi-finished copper products. A June 1 White House fact sheet referenced recent developments in steel, aluminum, and copper output in the US.
Morgan Stanley outlined three discrete scenarios and their likely market implications:
- Tariff announced with advance notice: The bank expects an acceleration of copper flows into the US ahead of implementation, which would tighten availability outside the US and push both COMEX and LME prices higher.
- Tariff ruled out: Excess importing into the US would likely stop, a dynamic that would exert downward pressure on both COMEX and LME benchmarks.
- Decision delayed: Continuation of the current pattern of flows and pricing would likely persist, a situation Morgan Stanley judges could be modestly negative for copper prices.
Market pricing currently reflects a roughly 43% probability that a 15% tariff will be in place by January 2027. Morgan Stanley additionally noted that COMEX net long positioning is already at an all-time high.
These factors together underline the decision as a key event for copper markets, with the potential to change trade flows, inventories and the relationship between US and global price benchmarks depending on the outcome.