One Month After US Tariff Hike: Imports Plunge, Inventory Surges, Price Spread Collapses [SMM Analysis]

On August 1, 2025, the US officially imposed a 50% tariff on imported copper semi-finished products. In the preceding months, US traders had rushed to stockpile copper cathode in large quantities to mitigate risks, leading to record growth in US copper imports. Industry statistics show that from March to June, weekly US copper cathode imports once surged to 44,000 mt, nearly triple the year-ago level, with an additional 400,000 mt of copper flooding into the US, equivalent to seven months of normal imports. By mid-to-late July, as expectations of the tariff implementation intensified, imports abruptly pulled back. Starting in August, imports were almost limited to small volumes of copper cathode (exempt from tariffs), while semi-finished product imports nearly halted.

Inventory side, the US faced unprecedented accumulation. As of month-end August, COMEX warehouse copper inventories had climbed to approximately 247,000 mt, hitting a record high and even surpassing the total global LME warehouse inventories (around 156,000 mt). The US entered a short-term "copper surplus" state, with the import window closed and the market shifting to destocking. Analysts expect the US to take four to five months to digest the accumulated inventories, during which import demand will remain low.

Price spreads experienced sharp fluctuations. In early July, the market mistakenly assumed copper cathode would also be taxed, triggering a surge in COMEX copper prices. On July 29, the premium over LME copper briefly exceeded $2,700/mt, opening a global arbitrage window that drove massive copper inflows into the US. However, on July 30, the White House announced an exemption for copper cathode, instantly collapsing the arbitrage logic. The price spread plummeted from $2,700/mt to $30/mt within 48 hours, swiftly closing the import window. The LME-US copper price spread returned to normal transportation costs, eliminating arbitrage demand.

Overall, the US copper cathode market in August-September exhibited a sharp import decline, inventory surge, and price spread pullback, transitioning from panic buying to passive destocking.