US tariff expectations are reshaping copper pricing power, and copper still faces a risk of moving toward $15,000/mt

Overview

This JPMorgan global commodities research report focuses on the copper market. The title's emphasis on "we don't need supply-demand balance" means that the main driver of copper prices has shifted from the global refined copper aggregate balance to the tug-of-war between the US and China over physical copper flows and inventory locations. The report acknowledges that the global refined copper market still shows a surplus in 2025 and 2026, but argues that US import arbitrage, potential phased tariff escalation, US inventory accumulation, and Chinese import demand together are changing the marginal pricing mechanism.

Core views

The report's core view is: first, tight mine supply, electrification, and data-center capex themes continue to support medium-term copper demand, but spot prices are already not cheap; second, the policy structure following the US Section 232 copper tariff review is the biggest catalyst in 2H26, and if a future-effective, gradually escalating tariff on refined copper cathodes is adopted, it will keep the COMEX/LME arbitrage window open and attract copper into the US; third, declining inventories outside the US will weaken the drag on prices from the global supply surplus, making LME copper more likely to form a higher floor and higher ceiling and advance toward $15,000/mt; fourth, China remains an important demand source, but due to concentrate constraints and US buying pressure, China is being forced to reopen import arbitrage at higher price levels, reducing its marginal pricing power.

Analysis framework

The report combines commodity fundamentals with policy scenarios: it first compares the global refined copper supply-demand balance, mine supply, refined output, scrap usage, and demand growth, then shifts to inventory geography, COMEX/LME and SHFE/LME arbitrage, US import volumes, Chinese import demand, and tariff scenarios. The authors argue that during periods of tariff uncertainty and continued US copper absorption, the explanatory power of the traditional global balance for prices temporarily declines, so inventory location, arbitrage windows, and policy communication should be monitored more closely.

Methodology notes

• Supply-demand balanceGlobal copper supply-demand balance sheet

  Judging the tightness of the copper market through mine output, refined output, refined consumption, and inventory changes.

  The report still presents a global balance sheet, but points out that when US import arbitrage and tariff expectations dominate physical flows, the global aggregate surplus alone cannot fully explain price gains, and regional inventories and arbitrage structures matter more.

• Cross-market arbitrageCOMEX/LME and SHFE/LME import arbitrage

  Price differentials between exchanges and regions determine the incentive for copper to flow to the US or China.

  The US attracts copper through the COMEX/LME spread; China, meanwhile, needs SHFE/LME import arbitrage to open up in order to satisfy domestic refined copper import demand. The two create a tug-of-war over physical flows.

• Policy scenarioSection 232 copper tariff scenario analysis

  Assessing whether the US will introduce phased, gradually escalating import tariffs on refined copper cathodes and how the communication approach will affect inventories and prices.

  The report believes that a future-effective, gradually escalating tariff is most bullish for LME prices because it would stimulate more copper front-loading into the US before tariffs take effect and cause inventories outside the US to fall rapidly.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Copper

  The report's core asset, with prices driven by US import arbitrage, tariff expectations, Chinese import demand, and changes in inventories outside the US.

  Strengths

  Tight mine supply and structurally supportive demand from electrification and data-center capex; potential tariff escalation in the US could continue to attract copper inflows and push up LME prices.

  Weaknesses

  The global refined copper balance still shows surplus in 2025 and 2026, and the current price around $13,600/mt already reflects a lot of good news.

  Comparison

  Compared with the traditional global supply-demand balance, the report places greater emphasis on regional inventories, COMEX/LME arbitrage, and SHFE/LME import arbitrage; China's ability to suppress prices at high levels has weakened.

  Risks

  Tariffs coming in below expectations, US inventory drawdown, faster-than-expected recovery in scrap supply, Chinese buyers boycotting purchases, or increased exports could all trigger price volatility or corrections.

• Gold, silver, platinum, palladium

  These appear as related precious-metal assets in JPMorgan's metals price forecast table and are not the report's core analytical object.

  Strengths

  The price forecast table shows that precious metals are still included in the broader base-metals framework for comparison.

  Weaknesses

  The body of the report mainly discusses copper and does not expand on precious-metal fundamentals.

  Comparison

  Compared with copper, precious metals in this article are only forecast-table items, lacking detailed analysis of policy arbitrage and physical inventory flows.

  Risks

  This article does not provide sufficient evidence to judge the independent risks of these precious metals.

Key data

• Current copper price level~$13,600/mtThe report says this price is more than 40% higher year over year and is no longer cheap in the context of a global refined copper surplus.
• JPMorgan copper price forecast3Q26 $14,500/mt; 4Q26 $14,800/mt; 2026 average $13,885/mt; 2027 average $13,800/mtThe new forecast has been materially raised versus the old February 2026 forecast, especially for 2H26 and 2027.
• Potential upside target$15,000/mtThe report believes copper prices could move toward this level over the next few quarters and may overshoot in an inventory-squeeze scenario.
• 2025 global refined copper balanceabout +512 kmtThe balance sheet shows a surplus, but LME copper prices are still up about 42% year over year.
• 2026 global refined copper balanceabout +359 to 360 kmtThe report says demand growth is about +2.2% yoy, refined production is about +1.6% yoy, and mine supply growth is roughly flat.
• US imports of refined unwrought copperabout 140 kmt per month on average from January 2025 to May 2026Nearly double the 75 kmt monthly average in 2024, reflecting US arbitrage and tariff expectations driving inflows.
• US inventory accumulationabout 1.2 mmt over 18 monthsThe report estimates that excess US imports were close to 870 kmt in 2025, with another nearly 400 kmt added through May 2026.
• US actual demand share and effective pullDemand is about 6% of the global total, but over the past year and a half it has pulled the market like import consumption closer to 9%This shows that inventory redistribution has amplified the US impact on global copper prices.
• China 2026 refined copper supply and demandSupply about 13.3 mmt; demand about 15.9 mmt; net cathode import requirement about 2.6 mmtEven with higher scrap usage, China still needs large refined copper imports.
• Potential US tariff path15% starting January 1, 2027; 30% starting January 1, 2028This is the phased broad import tariff scheme that was proposed in the June 30, 2025 report but not implemented and is now under review.
• Downstream semi-finished copper tariff50%The report believes this leaves room for further escalation of tariffs on refined copper cathode imports.

Impact & implications

For investment implications, copper is no longer just about whether the global balance sheet shows a surplus in the short term. Instead, investors need to watch whether US tariff communication keeps future import incentives intact, whether US inventories remain anchored onshore, when Chinese import arbitrage opens, and whether LME deliverable inventories fall rapidly. If phased tariff escalation is confirmed or strongly hinted, the market may front-load copper into the US, leading to a rapid contraction in inventories outside the US, a steeper spot premium on the LME curve, and prices moving above already bullish forecasts. Conversely, if policy communication weakens expectations of future tariffs or causes US inventories to be released, LME prices could come under pressure.

Risks

• The final US Section 232 copper tariff does not adopt a phased escalation structure, or policy communication is insufficient to maintain the COMEX/LME arbitrage window.
• If onshore US copper inventories are rapidly released back to the international market, that could ease tightness in inventories outside the US and pressure LME prices.
• Chinese buyers boycotting purchases or opportunistic exports could create significant volatility at high price levels.
• If scrap copper flows into smelting and refining recover faster than expected, it could further loosen the refined copper balance.
• The apparent global refined copper surplus remains a medium-term valuation constraint, and current prices are already not cheap.
• If Chinese policymakers restrict copper exports due to supply-security concerns, inventories outside the US could tighten further and amplify upside volatility.

What to watch

• The domestic copper market update that the US Secretary of Commerce is expected to submit to President Trump around June 30, 2026, and the subsequent Section 232 policy decision.
• Whether the import tariff on refined copper cathodes adopts a deferred-start, phased escalation path, along with the starting rate and timetable.
• Whether the COMEX/LME spread remains attractive enough to keep pulling imports into the US.
• When the SHFE/LME import arbitrage window opens, and China's replenishment behavior in the $12,500 to $13,500+/mt price range.
• Changes in the geographical distribution of inventories on the LME, COMEX, SHFE, and in Chinese bonded zones, especially whether inventories outside the US decline rapidly.
• Whether the LME spot-to-3-month spread moves into a stronger spot premium as a signal of inventory squeeze.
• Whether China's scrap copper supply bottlenecks ease and whether scrap usage growth can offset mine-supply constraints.
• Mine disruptions and ramp-up progress at Codelco, Kamoa Kakula, Grasberg, and others.