Copper Futures Fall 4.2% as Tariff Bets Reprice, Concentrate Market Stays Tight

Copper futures fell sharply after renewed uncertainty over U.S. refined-copper tariffs, but the physical cash market barely moved. At the same time, record U.S. inventories, weaker mine output and zero treatment charges continue to expose a split between available refined metal and scarce concentrate.

By Paul Ploumis
Published September 15, 2026

SEATTLE (Scrap Monster): Copper futures sold off sharply on September 10 as the market reassessed expectations for U.S. refined-copper tariffs, while physical cash pricing remained comparatively stable.

COMEX October copper futures fell 4.2% to $6.5355 per lb after trading above $6.87 earlier in the week. LME three-month copper dropped 3.1% to $14,312 per tonne from an intraday peak of $14,875.

Futures Fall While Cash Copper Holds Steady

The LME cash settlement stood at $14,390 per tonne on September 10, compared with $14,371 one week earlier.

The divergence suggests the futures market repriced tariff expectations much more aggressively than the immediate physical market, according to the underlying Crux Investor analysis.

Copper remained about 16% higher year to date. The TSX materials group fell 3.6% during the session, while shares of major copper producers also moved sharply lower.

Tariff Expectations Drive Copper Into U.S. Warehouses

Anticipation of possible U.S. tariffs has encouraged large volumes of refined copper to move into the United States.

COMEX warehouse inventories reached a record 696,259 tonnes in the week ended September 11. That compared with approximately 235,000 tonnes held on the London Metal Exchange and 63,000 tonnes on the Shanghai Futures Exchange.

Shanghai copper inventories were down about 85% from mid-March and had fallen to their lowest level since January 2024.

U.S. refined copper imports have risen sharply over the past decade while domestic production has declined, increasing the market’s sensitivity to any change in tariff policy.

Refined-Copper Tariff Decision Remains Unresolved

The U.S. Commerce Department was due to provide an updated recommendation on refined copper by June 30, but no final tariff decision has been announced.

The policy framework under consideration calls for a 15% tariff on refined copper beginning January 1, 2027, potentially rising to 30% in 2028.

Reuters reported on September 10 that the White House was weighing the benefits of encouraging more domestic copper production against the risk that higher imported-copper costs could raise expenses for U.S. manufacturers.

Mine Supply Tightens While Refined Copper Remains in Surplus

The supply picture differs sharply depending on whether the market is viewed at the mine, concentrate or refined-metal level.

International Copper Study Group data show global mine production declined 1.1% in the first half of 2026. Chilean mine production fell 6.6% over the same period.

By contrast, the global refined copper market recorded a preliminary surplus of approximately 131,000 tonnes during the first half.

The distinction is important. Concentrate supply remains constrained even while refined cathode is comparatively available.

Zero Treatment Charges Shift Economics Toward Miners

Copper treatment and refining charges settled at zero for 2026, the first zero annual benchmark in the market’s history, while spot terms have moved below zero.

Treatment charges are normally deducted from the amount miners receive for concentrate. When those charges fall to zero or turn negative, smelter economics weaken while concentrate suppliers retain a larger share of the metal value.

Smelters can still earn revenue from by-products and cathode premiums, but the collapse in treatment charges has removed one of their major traditional sources of income.

Members of the Chinese Copper Smelters Purchase Team have discussed production cuts of more than 10% for 2026 as the industry responds to the concentrate shortage.

Chile Adds Another Supply Constraint

Chile’s copper production fell 9.4% year over year in July to 403,424 tonnes.

August copper export revenue declined 14% from July to $4.62 billion, the lowest level since July 2025, as weather and operational disruptions affected mines and ports.

Tariff Exposure Differs Across Copper Producers

The effect of any future refined-copper tariff would depend heavily on where a producer sells metal and whether it owns U.S. smelting capacity.

Producers selling cathode into the United States could benefit from a higher domestic price if tariffs are imposed, while metal sold into Europe or Asia would remain more directly tied to LME pricing.

Freeport-McMoRan and Rio Tinto operate the two active U.S. copper smelters. A tariff on imported refined copper could improve the economics of those domestic assets while raising input costs for U.S. fabricators.

What the Copper Market Is Watching Next

Crux Investor’s analysis argues that one of the next important signals will be whether record U.S. copper inventories begin to draw down.

If COMEX inventories fall consistently while LME stocks remain near current levels, it could indicate that U.S. industry is consuming the accumulated metal rather than simply storing it ahead of a tariff decision.

The broader market therefore remains split between short-term policy-driven inventory positioning and a longer-term shortage of mine concentrate.

Courtesy: Crux Investor