Copper Monthly Metal Index Update

The Copper Monthly Metal Index (MMI) experienced a decline of 1.87% from July to August, which left it relatively stable. However, significant fluctuations were observed in copper prices from August to September, with both notable increases and decreases.

USGS Lists Copper as a Key Mineral

Although it narrowly avoided tariffs in recent months, the copper market remains a focus for the US. The US Geological Survey (USGS) has recommended adding copper to its draft list of essential minerals. This decision stems from analyses identifying vulnerabilities in copper supply chains that could seriously affect the US economy, defense, and green energy objectives. Copper, after all, plays a crucial role in electrification, renewable energy infrastructure, and advanced manufacturing.

By including copper on its critical minerals list, the USGS signals increasing demand and highlights concerns about domestic supply and processing capabilities. These may not be robust enough to manage trade disruptions, regulatory delays, or over-reliance on external sources.

The USGS’s modeling has considered over 1,200 trade scenarios, focusing not just on global production shortages but also on bottlenecks in transportation, refining, and import routes. The addition of copper indicates that states could face significant risks in sectors reliant on copper if disruptions occur. More information on navigating these challenges can be found in the MMO report.

Future of “Important” Copper

This USGS draft list is likely to influence copper-related policies and investments. Finalizing the list may lead to greater focus on permits, mining, processing, and recycling efforts in the US, potentially boosting funding, tax policies, and national strategies aimed at enhancing domestic production and rejuvenating supply chains.

All of this could ultimately encourage new mining projects, upgrades to existing infrastructure, and increased national refining capabilities, which would lessen dependence on foreign sources.

COMEX vs. LME Price Trends

Initially, pricing for COMEX and LME contracts began diverging at the start of the year when the US began examining copper imports. The market spent several months gauging the potential impact of COMEX pricing obligations, which led to a significant premium compared to LME. After refined copper was removed from Section 232 tariffs in late July, COMEX prices dropped dramatically, losing nearly $3,079 per metric ton from their peak.

By August, a sharp decline in COMEX prices helped align the two contracts more closely, restoring their long-term correlation. This adjustment occurred in light of the exemption of tariffs on refined copper and an excess of copper in COMEX warehouse stocks, which no longer warranted a significant price delta.

However, although the two contracts are now more aligned, the price spread hasn’t completely disappeared.

Tariff Vulnerability for Sophisticated Copper

Before 2025, COMEX prices typically averaged a premium of $18 over LME prices. This premium hit its low point at the start of August, averaging $130 per metric ton. After the initial seven months of the year, the price stability that emerged since August has become notable. While copper tariffs have been lifted, copper products still carry 50% tariffs. Furthermore, ongoing investigations into copper imports haven’t entirely eradicated risks; instead, they’ve been postponed until 2027. The Secretary of Commerce has suggested implementing universal tariffs on refined copper at 15% starting in 2027, increasing to 30% in 2028. This could significantly affect copper prices both domestically and internationally.

Market Response Post-Tariff Disruption

Even with proposed long-term tariffs and the new mineral list from USGS, the market seems to be relatively stable with the modest COMEX premium. The sudden removal of tariffs took investors by surprise, leading to a quick retreat from large positions in the market. Goldman Sachs even advised clients to invest in copper just prior to the price drop, later admitting their oversight.

Investment funds, which significantly influence market prices, have withdrawn notably, particularly in the COMEX sector. The risks had been higher for COMEX before tariffs were eliminated, but both contracts continue to show a long position overall.

Copper Price Movements

• China’s copper wire prices have seen the largest increase, up 3.0% to $11,204 per metric ton as of September 1st.
• China’s copper scrap market has remained stable, with a slight increase of 2.89% to $10,862 per metric ton.
• LME Primary 3-Month Copper Prices rose by 2.30% to $9,877 per metric ton.
• Conversely, US copper producer prices for Grade 102 fell by $5.97, now at 13.60% per pound.
• US copper producer prices for grades 110 and 122 dropped 14.11% to $5.72 per pound.