In the first three quarters of 2026, the copper market staged a powerful rally amid repeated macro disturbances and tug-of-war between industrial supply and demand. Although geopolitical conflicts in the Middle East and shifts in Federal Reserve monetary policy triggered periodic corrections, persistent tightening on the mining supply side, combined with the anticipated US copper import tariff that reshaped global trade flows, kept pushing the copper price center higher. On September 10, the LME three-month copper price touched US$14,875 per tonne intraday, setting an all-time high; the SHFE copper futures main contract price that day climbed to 112,330 yuan per tonne, a secondary high just shy of the record 114,160 yuan per tonne set at the end of January.
As the market enters the fourth quarter, analysts believe that the factors that previously drove the rally 鈥?tight mine supply, smelter production cuts, and inventory migration 鈥?will continue to provide support. However, the final direction of the US "Section 232 copper tariff" policy and whether US copper inventories can flow back will become key variables affecting copper prices.
Relentless disruptions, yet copper keeps getting stronger
Looking back at the first three quarters, the copper market was far from smooth sailing. Wang Weiwei, non-ferrous metals analyst at Yide Futures, said that geopolitical conflicts, risk-aversion sentiment, and rising expectations of stagflation and Fed rate hikes early in the year weighed noticeably on copper valuations. On February 28, the Middle East situation escalated across the board, crude oil prices surged, and Brent crude futures briefly topped US$120 per barrel. Rising shipping risks in the Strait of Hormuz, combined with growing stagflation concerns, pushed up energy costs while risk appetite declined, jointly weighing on copper prices. On June 18, the Fed's FOMC meeting delivered a more hawkish signal than expected, significantly reversing rate-cut expectations. As the dollar index and 10-year Treasury yields surged in tandem, copper prices faced renewed adjustment pressure.
Zhan Dapeng, metals analyst at Everbright Futures, said that despite repeated macro disturbances in the first three quarters, the copper price center continued to rise, driven by persistently deteriorating copper concentrate treatment charges (TC), expectations of supply contraction, and regional supply-demand imbalances caused by US refined copper trade arbitrage. From a fundamental perspective, Wang Weiwei noted that global copper mine production cuts and continually falling TC meant the contraction in copper supply clearly outpaced the decline in consumption. With fundamental support, SHFE copper prices held firmly above the 100,000 yuan per tonne mark. In terms of supply and demand data, global copper mine supply growth in 2026 is projected at only 0.58%, below the 1.90% growth in refined copper demand. The global refined copper surplus is expected to shrink from 469,000 tonnes in 2025 to 250,000 tonnes in 2026, indicating tightening supply.
Meanwhile, the demand structure is also shifting. Although traditional industries are dragging on copper consumption, emerging sectors such as computing power and energy storage continue to provide incremental support, keeping total copper consumption growing. Sluggish growth on the mine supply side and a narrowing supply-demand growth gap have provided a relatively solid floor for copper prices.
US "copper absorption" pronounced, global copper inventories sharply divergent
If the mine supply shortage was the industrial foundation for copper's rally in the first three quarters, then the anticipated US "Section 232 copper tariff" policy was one of the most dramatic disruptive factors in the copper market this year. In 2025, the US launched a Section 232 copper tariff investigation, imposing a 50% tariff on copper semi-finished products, while also proposing a plan: starting in 2027, a 15% import tariff on refined copper, rising to 30% in 2028. Although subsequent policy details were adjusted multiple times, the final outcome remains closely watched by the market.
Under the influence of the anticipated US Section 232 copper tariff policy, COMEX copper has consistently maintained a premium over LME copper. Traders, seeking cross-market arbitrage profits, shipped large volumes of copper resources to the US, driving continuous accumulation of US copper inventories. SMM data shows that from September 2025 to September 2026, COMEX copper inventories rose from about 320,000 short tons to about 770,000 short tons, more than doubling. In contrast, LME copper inventories fell from a peak of about 400,000 tonnes in April 2026 to about 250,000 tonnes. The continued inventory build in the US versus destocking in other markets formed a stark contrast.
This shift also transmitted to the domestic spot market. SMM data shows that the SMM 1# electrolytic copper premium recently approached 1,400 yuan per tonne, reaching its highest level since October 2023. The SMM copper research team believes that the anticipated US tariff continuously attracting copper resources to the US is an important reason for the global copper resource misallocation. At the same time, tight domestic recycled copper raw material supply weakened its supplementary role for refined copper supply, and combined with downstream concentrated stocking ahead of the Mid-Autumn and National Day holidays, jointly pushed domestic spot supply tighter.
However, as the late-September observation point for US tariff policy approaches, the market's attitude toward new arbitrage opportunities has become more cautious. The team noted that the COMEX-LME copper price spread has recently continued to narrow, with some contract spreads no longer sufficient to cover transportation, financing, warehousing, and delivery conversion costs, essentially closing the arbitrage window for new physical shipments to the US. Notably, although the September 29 market-watched US tariff policy date did not produce a clear result, this does not mean the US copper tariff measures have been cancelled. If the US continues to maintain the expectation of future refined copper taxation, traders may still position ahead of time, and the trend of global copper resources concentrating in the US may persist.
How will copper prices play out in Q4? US tariff policy may be the biggest wildcard
Looking ahead to the fourth quarter, market attention remains focused on the final implementation of the US Section 232 copper tariff. In terms of scenarios, Wang Weiwei believes there are three possibilities: if the US imposes a 15% tariff on refined copper as planned, global copper trade flows may further restructure, spot inventories in non-US regions would continue to deplete, and copper prices could gain new structural support; if the US tariff policy remains unresolved, the market will repeatedly speculate around US tariff expectations, and copper prices may maintain wide-range fluctuations at high levels; if the US explicitly shelves the refined copper tariff policy, the earlier tariff premium could quickly retrace, expectations of COMEX copper inventory repatriation would rise, and copper prices would face periodic adjustment pressure.
Zhan Dapeng believes that although spot copper is currently tight in non-US regions and the LME near-month contract shows a deep backwardation structure, this does not fully reflect genuinely strong consumption growth. A considerable portion is driven by inventory relocation under the anticipated US tariff policy. Once the US clarifies the copper tariff rate, effective date, and exemption conditions, the market's trading logic could shift from the previous "rush shipping and stockpiling arbitrage" to "bullish factors materializing and inventory repatriation." At that point, US copper imports may decline noticeably, and already accumulated inventories may seek new trading and delivery channels. Whether COMEX copper registered warrants are cancelled and transferred to LME warehouses, or commercial inventories flow back into non-US markets through trade channels, both could impact the LME pricing system. Given that inventory transfers take time, copper price adjustments will likely manifest as a gradual decline rather than a cliff-like drop.
Zhan Dapeng further noted that mine supply constraints will continue to limit the downside for copper prices, and the medium- to long-term supply-demand imbalance for copper will persist. From a longer cycle perspective, Wang Weiwei said that the global copper mine capacity bottleneck remains, and the global refined copper market in 2027 is expected to maintain a weak surplus of about 395,000 tonnes, with no significant inventory accumulation pressure yet. Overall, the fourth-quarter copper market will be influenced by three factors: mine supply constraints, emerging demand realization, and US tariff policy. Copper prices are expected to remain range-bound with an upward bias.