Industrial metal prices remain resilient, with supply-side risks continuing to dominate market sentiment. Markets are also increasingly focused on the outcome of the US tariff review on refined copper, due by 30 June, which has the potential to significantly influence global trade flows and pricing dynamics. Copper and aluminium both reached fresh highs earlier this week, with 3-month LME copper briefly trading above 14,000 \$/MT on Monday and 3-month LME aluminium exceeding 3,780 \$/MT on Tuesday. While both metals have since eased back, the broader trend remains constructive, and aluminium in particular appears to be building momentum towards the 4,000 \$/MT level.
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The US tariff review on refined copper is now the key focus for the market. Last year, refined copper was unexpectedly excluded from tariff measures. The current review will determine whether tariffs are introduced in a phased manner, potentially starting at 15% from January 2027 and rising to 30% the following year. Until a decision is reached, uncertainty is likely to keep volatility elevated. The prospect of tariffs has already encouraged strong copper imports into the US as consumers and traders seek to secure material ahead of any potential implementation date. This is clearly reflected in the widening premium between COMEX copper prices in the US and LME copper prices globally, with metal continuing to be drawn into the American market. Should refined copper once again be excluded from tariffs, the market could see a sharp correction in COMEX prices as tariff-related positioning unwinds, similar to the reaction witnessed following last year's announcement. Conversely, if tariffs are imposed, the resulting shift in trade flows could further tighten availability outside the US and increase costs for American manufacturers. The timing of any tariff introduction is particularly noteworthy. The US remains heavily dependent on imported refined copper to support its electrical infrastructure, renewable energy projects and manufacturing sectors. Additional import costs would come at a time when many industrial consumers are already facing higher operating expenses, including elevated energy prices linked to ongoing geopolitical tensions in the Middle East.
Aluminium continues to outperform, supported by growing concerns around Middle Eastern supply disruptions and a steadily tightening physical market. Inventories that have previously acted as a buffer against supply shocks are continuing to decline, leaving the market increasingly vulnerable to further disruptions. The forward curve remains firmly in backwardation, indicating strong demand for prompt material and reinforcing concerns over near term supply availability. This market structure typically reflects a willingness among consumers to pay a premium for immediate delivery, highlighting the current tightness in physical supply. Attention remains focused on the Strait of Hormuz, a critical shipping route for both alumina and aluminium. As long as transit through the strait remains constrained, smelters in the region are likely to continue drawing down alumina stockpiles. Prolonged disruption could eventually force production adjustments if raw material inventories become insufficient. Even once shipping routes normalise, the market is likely to face logistical challenges. Aluminium exports from the region, together with alumina and bauxite imports required for smelting operations, are expected to encounter delays as shipping backlogs are cleared. This could extend supply tightness well beyond the immediate geopolitical event and continue to provide support for prices.
Investor sentiment towards industrial metals remains constructive with significant long positioning in both copper and aluminium, supported by supply concerns, ongoing infrastructure investment themes and expectations of future demand growth linked to electrification and energy transition projects. As we move through the remainder of June, trade policy developments and geopolitical risks are likely to remain the dominant drivers for both markets, creating a potentially volatile environment for consumers with future purchasing requirements.
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