Copper prices in the U.S. are nearing historical highs as the market weighs the risks of tariffs on refined copper and expectations for the reopening of the Strait of Hormuz.

While investors are waiting for the Trump administration's decision on copper tariffs, progress regarding the potential reopening of the Strait of Hormuz has boosted market risk appetite, with New York copper futures hovering near historical highs. Data shows that COMEX copper futures are quoted at $6.65 per pound, only slightly below the historic peak reached in May. Since the beginning of this year, COMEX copper prices have risen by over 17%, further widening their premium over London Metal Exchange (LME) copper prices, as traders position themselves for potential import tariff measures that the Trump administration may announce. Notably, although the June 30 deadline for Commerce Secretary Ross to submit tariff recommendations has passed, the White House has yet to announce a final policy. Producers, consumer enterprises, and traders are closely monitoring whether Trump will expand the current trade protection measures against semi-finished copper products to include refined copper and other raw materials. However, the timeline for when the Trump administration will make a final decision regarding tariffs on refined copper remains unclear. Driven by expectations of tariffs, the official COMEX copper inventory in the U.S. has increased by over 40% this year, setting a new historical high. The market currently estimates that the total copper inventory in the U.S. has surpassed 1 million tons. The market believes that, amid rapid developments in grid construction, artificial intelligence (AI), electric vehicles, and the defense industry, copper is becoming an increasingly important strategic resource for the U.S., while the tariff expectations have also objectively prompted the U.S. to establish strategic stockpiles ahead of time. Behind the continuous increase in U.S. copper inventories is the ongoing withdrawal of inventories from other regions around the world higher import tax rates in the U.S. are leading to a significant flow of copper resources into U.S. ports, tightening supply in other regions. Data shows that the U.S. imported approximately 200,000 tons of copper in July, a record monthly high since IHS Markit began tracking in 2014, representing the fastest import rate in at least 12 years. Currently, about 110,900 tons of copper are stored in U.S. ports outside the London Metal Exchange (LME) warrant system. Market participants believe that if Trump ultimately decides to impose tariffs on refined copper, there may be a last surge in imports before the tariffs are officially implemented; if the plan is abandoned, the substantial inventory and arbitrage positions accumulated over the past 18 months may be liquidated rapidly, leading to a reconfiguration of global copper trade flows. Meanwhile, concerning the situation in the Middle East, market worries about an escalation of the U.S.-Iran conflict are shifting towards hopes for an agreement between the two sides to reopen the Strait of Hormuz. According to the latest reports, regional sources and U.S. officials have indicated that the U.S., Iran, and Oman are "close to reaching" a temporary agreement for reopening the Strait of Hormuz, with the U.S. hoping to announce the accomplishment of this temporary agreement by August 5. Reports state that negotiations for a temporary agreement surrounding the reopening of the Strait of Hormuz have been ongoing for several weeks. This temporary agreement aims to restore the ceasefire status between the U.S. and Iran, and restart discussions regarding the Iran nuclear deal, while partially meeting Irans demands for greater control over the Strait of Hormuz, a level of control that Iran did not possess prior to the conflict. Citing two regional sources, the report says the temporary agreement under discussion sets a 60-day arrangement for reopening the Strait of Hormuz, to be jointly executed by Oman and Iran, with the possibility of an extension. Most commodities, including base metals like copper, are expected to benefit from measures aimed at addressing the Middle Eastern conflicts that have impacted global markets this year. The latest round of optimism has eased market concerns about inflation and prompted traders to reduce their bets on the Federal Reserve raising interest rates for the remainder of 2026. This is positive for base metals, which are highly correlated with global economic growth expectations.