Goldman Sachs has predicted a substantial increase in US copper imports in the near future, estimating a surge of 50-100%. This forecast comes in light of rising metal prices and the looming threat of tariffs proposed by the Trump administration. The administration initiated an investigation into copper imports on national security grounds, signaling a potential imposition of tariffs on the metal.

Analysts at Goldman Sachs anticipate a tariff of at least 25% by the end of the year, similar to tariffs imposed on other metals. This tariff imposition could trigger a surge in copper imports, potentially leading to a significant rise of 200,000-300,000 tons in US copper inventories by the third quarter’s end. The impending tariff has already created a lucrative arbitrage opportunity for metal traders to capitalize on by importing physical copper into the US before the tariff deadline.

The price differential between CME’s May copper contracts and their London counterparts has widened, with the former trading $800 per ton higher. Goldman projects that the increased copper prices will drive US copper stocks from the current 95,000 tons to a range of 300,000-400,000 tons by the end of the third quarter. This surge would represent a substantial portion, approximately 45-60%, of global reported inventories, leaving global copper inventories at notably low levels.

Furthermore, Goldman Sachs foresees a global copper market deficit of 180,000 tons in 2025 due to strong demand for electrification, stimulus measures in China, and sluggish growth in mine supply. The bank’s projections suggest that the impact of inventory dislocation will primarily manifest in time spreads, with a forecasted average LME 3-month price of $10,200 per ton in Q3. The anticipated inventory dislocation is expected to lead to a significant LME Sep-Dec backwardation, potentially reaching a maximum of $350 per ton.

In conclusion, the potential tariff threat on copper imports into the US, coupled with the projected global copper market deficit, is expected to significantly influence the copper market dynamics in the coming months. This shift may have far-reaching implications for metal traders, manufacturers, and global supply chains reliant on copper as a critical industrial commodity.