Copper holds near record highs as a US tariff review looms over a tight market

Copper is trading near record highs as a looming US tariff decision and persistent supply shortfalls keep the market exceptionally tight, even as a hawkish turn from the Federal Reserve clouds the longer-term demand outlook. The metal, long viewed as a barometer of global economic health, has become one of the standout commodity stories of 2026.

On the London Metal Exchange, three-month copper has been hovering in record territory around $13,500 to $13,700 a tonne in recent sessions, after briefly spiking above $14,500 intraday earlier in the year. US futures have held near all-time highs as well. The gains cap an extraordinary run that has made copper one of the best-performing industrial metals, driven by a combination of trade distortions, supply disruptions and structural demand growth.

The most immediate catalyst is policy. Washington imposed a 50% tariff on semi-finished copper products last year, and a review due at the end of June is widely expected to determine whether refined copper will also be captured. The uncertainty has triggered a scramble to ship metal into the United States ahead of any decision, draining inventories from exchange warehouses elsewhere and widening the price gap between US and international contracts. That front-loading has tightened availability outside the US and added a speculative bid to prices.

Supply, meanwhile, has struggled to keep pace. A series of disruptions at major mines, including operations in Indonesia, the Democratic Republic of Congo and Chile, has forced analysts to trim production forecasts and widen their estimates of the global deficit. Chile's state producer has flagged reduced output at a key mine, and the Middle East conflict has added another layer of cost pressure by lifting prices for sulphuric acid, a critical input for a meaningful share of global copper supply. Forecasters now project a substantial shortfall: one investment bank sees an average annual deficit approaching half a million tonnes through the end of the decade.

Demand tells the other half of the story. Copper has increasingly shed its identity as a purely cyclical industrial metal and taken on the character of a strategic input for the artificial intelligence and electrification boom. Data centers, which require far more copper than conventional facilities for power and cooling, along with electric vehicles and renewable-energy infrastructure, have created a structural source of demand that has proven relatively insensitive to high prices. Several banks have lifted their forecasts accordingly, with year-end targets clustered around current levels and some projecting further gains into 2027.

There are countervailing forces, however. The Federal Reserve's recent hawkish shift and the prospect of higher-for-longer interest rates have raised questions about the trajectory of global growth and industrial activity, which could temper metals demand over time. The easing of the energy shock following the US-Iran peace deal has improved risk appetite, but the same tighter monetary backdrop that has lifted the dollar also poses a headwind for dollar-priced commodities.

For now, the tightness is winning out. With the tariff review approaching, inventories thin and the deficit projected to deepen, copper sits at the intersection of trade policy, supply scarcity and a technology-driven demand surge. How the end-of-month decision lands, and whether the structural shortfall proves as durable as bulls expect, will shape whether the red metal's record run has further to go.