US refined copper tariff policy is once again facing uncertainty. The White House has yet to decide whether to impose tariffs on refined copper imports, as it weighs support for the domestic copper industry against higher manufacturing costs. Following the news, copper prices fell by more than 4% at one point.
The impact on copper scrap extends beyond outright copper prices. Over the past year, tariff expectations have widened the COMEX–LME spread, redirected copper cathode to the US and indirectly supported scrap prices and payabilities elsewhere. If the tariff is not implemented, could this mechanism reverse?
Tariff Expectations Have Already Redirected Copper Flows
Under the US copper policy announced in 2025, the President will decide whether to introduce a 15% tariff on refined copper imports from January 1, 2027, rising to 30% in 2028. The tariff therefore remains under consideration and has not yet taken effect.
Nevertheless, expectations have caused COMEX copper to trade at a sustained premium to LME copper. The resulting arbitrage encouraged traders to ship more cathode to the US.
US refined copper imports rose 80% YoY to 1.64 million mt in 2025. By the end of July 2026, CME warehouses held approximately 58% of global visible exchange copper inventories. Meanwhile, LME and SHFE inventories continued to decline, tightening copper availability outside the US.
Why Do Cathode Flows Affect Scrap Prices?
The tariff does not directly determine scrap prices. Its influence is transmitted through the cathode market.
As cathode flows to the US, available supply in China, Europe and other Asian markets decreases, pushing up spot procurement costs. For copper rod and semis producers, the substitution value of high-grade scrap such as Millberry increases, strengthening scrap demand and buyers’ acceptance of higher payabilities.
The transmission mechanism is:
Higher tariff expectations → wider COMEX premium over LME → cathode flows to the US → tighter supply elsewhere → higher cathode spot premiums → stronger scrap substitution demand → support for scrap prices
What If the Tariff Is Not Implemented?
If the US cancels or further delays the tariff, the policy-driven COMEX premium could narrow, reducing the incentive to ship cathode to the US. More material may remain in Europe and Asia, easing supply tightness and reducing the urgency to substitute expensive scrap for cathode.
The reverse mechanism would be:
Lower tariff expectations → narrower COMEX–LME spread → weaker US-bound flows → improved supply elsewhere → lower scrap substitution demand → pressure on scrap payabilities
However, the process would not be immediate. Copper already held in US warehouses remains subject to logistical, financing and delivery constraints. Global scrap inventories are still low, while Chinese buyers continue to face shortages of VAT-invoiced domestic material. Scrap payabilities may therefore remain resilient even if the refined copper tariff is not introduced.
The proposed domestic sales requirement for high-quality US copper scrap is also a separate policy measure. It does not amount to a comprehensive export ban, but it could still restrict growth in US exports of premium scrap.
Market Outlook
According to SMM market surveys, Millberry payabilities remain high due to low inventories and rigid demand from copper semis producers. Even if cathode supply outside the US improves, Millberry prices may initially experience slower gains rather than a sharp correction.
No. 1 and No. 2 copper scrap are more sensitive to smelting margins, downstream operating rates and impurity treatment costs. If copper prices decline, cathode availability improves and recycled copper producers remain under margin pressure, their payabilities may weaken earlier than Millberry.
SMM believes that cooling expectations for US refined copper tariffs would weaken the marginal support for global scrap prices rather than immediately reverse the underlying supply tightness.
If the tariff is implemented, the COMEX–LME spread may continue attracting cathode to the US and supporting scrap substitution demand elsewhere. If it is cancelled or delayed, a narrower spread could improve non-US cathode availability and reduce buyers’ willingness to accept expensive scrap.
A significant decline in global scrap payabilities would likely require the COMEX–LME spread to remain narrow, LME and Asian inventories to recover visibly, and scrap supply to improve simultaneously. For now, global scrap tightness remains intact, making a sharp correction in payabilities unlikely.
