Metals generally declined, with copper futures closing lower. Tariff concerns drove COMEX copper prices to a record high. [LME closing on March 26]

On Wednesday, March 26, LME copper prices closed lower, while US copper futures hit a record high, with the premium over London copper widening, as market bets on potential US import tariffs on copper increased.

At 17:00 London time (01:00 Beijing time on March 27), three-month copper closed down $185.00, or 1.83%, at $9,927 per mt, after earlier hitting $10,164.5, the highest since June 7.

The most active May copper contract on the US Comex rose 0.45% to $5.234 per pound, after hitting a record high of $5.374.

The premium of Comex copper over LME copper widened to a record $1,624 per mt, or 16%.

Dan Smith, research director at Amalgamated Metal Trading, said the market is digesting expectations that the US may impose a 25% import tariff on copper. "It's not 100%, but the likelihood is increasing."

A month ago, the US ordered an investigation into potential new tariffs on imported copper, aiming to rebuild US copper production.

Technically, the investigation could take up to nine months.

The US 25% tariffs on steel and aluminum products took effect in early March. The US also stated that "reciprocal tariffs," aimed at aligning US tariff levels with those of other countries, will take effect on April 2.

Since the US imports about 40% of its copper demand, mainly from Chile and Canada, the market's focus is on US copper supply ahead of a potential decision, as well as concerns that attempts to divert copper from other consuming regions could tighten market supply.

LME copper inventories have dropped significantly to 111,000 mt since mid-February, but spot copper is at a discount to three-month copper, indicating no severe near-term supply shortage.

Goldman Sachs maintained its LME copper price forecast for next year on Wednesday and expects no surplus in US copper inventories in Q3.

Goldman Sachs predicts LME three-month, six-month, and twelve-month copper prices at $9,600, $10,000, and $10,700 per mt, respectively. The bank noted that copper prices face near-term downside risks.