Copper prices fell on Tuesday as global supply continued to expand alongside rising stockpiles of the industrial metal in the United States.

Copper was officially added to the US government’s list of “critical minerals” deemed essential for economic and national security, according to a new report — a move underscoring the metal’s growing importance to modern industries spanning energy and technology.

Ironically, the US already holds the world’s second-largest copper inventory after China — without spending a single federal dollar to build it. Market forces alone created this reserve, driven by a wide arbitrage gap between prices on the US CME exchange and the London Metal Exchange (LME).

Price gap drives copper toward the US

The price differential between the two markets has attracted massive physical copper inflows into the US, a trend that continues as traders bet that the “critical mineral” designation — first floated in August — could eventually lead to import tariffs.

Arbitrage trade: from investigation to major price gap

When President Donald Trump ordered a national security review of copper imports in February, markets quickly priced in potential tariffs similar to those previously imposed on steel and aluminum.

By July, the gap between US and global copper prices had widened to roughly $3,000 per metric ton, creating a lucrative opportunity for major traders to ship as much copper as possible to the US for quick profit.

However, that premium collapsed later in July when the Trump administration surprised markets by imposing tariffs on semi-finished copper products while delaying a decision on refined copper duties until July 2026.

The gap returns

Still, arbitrage activity hasn’t ended. The spread has widened again, with the spot premium on the CME rising from under $100 per ton in August to more than $300, and the 10-month forward spread reaching around $800 per ton.

While smaller than July’s record levels, the gap remains sufficient to cover shipping costs, keeping incentives strong for traders to bring more copper into the US.

Massive CME inventories

This dynamic is reflected in surging copper inventories registered on the CME, which only allows delivery within the US.

Stocks have jumped from 83,900 tons in February to more than 335,000 tons today — meaning CME warehouses now hold more copper than the LME and Shanghai exchanges combined.

Deliveries continue daily into the American delivery network, particularly through the Port of New Orleans, as well as Baltimore, Salt Lake City, and Tucson.

“Economically trapped” copper in America

Benchmark Minerals Intelligence estimates that between 731,000 and 831,000 tons of copper in the US can be considered “economically trapped” — meaning it would take a sharp reversal in price spreads for this metal to leave the country.

With US premiums widening again, inventories are likely to keep rising rather than declining.

Trade data — delayed by the recent government shutdown — show that refined copper imports exceeded 1 million tons in the first seven months of the year, up roughly 400,000 tons from the same period last year.

Export data from top producers like Chile, Peru, and Australia also confirm strong flows toward the US.

The US becomes copper’s top destination

The United States has effectively become the world’s main destination for excess copper, enabling Germany’s Aurubis — Europe’s largest producer — to raise its 2026 delivery premium by 38% to a record $315 per ton above LME prices.

A strategic stockpile without official planning

Market dynamics have triggered a major redistribution of global copper inventories toward the US, where the metal is now effectively “locked in” by the same forces that brought it there.

Without any formal strategy, the US has effectively built what could be described as a “strategic copper reserve” — managed by private industry rather than the government.

This reserve continues to grow and will likely keep expanding as long as arbitrage opportunities persist, allowing traders to profit by buying copper abroad and shipping it to US ports.

China is believed to hold the world’s largest strategic copper stockpile, estimated at around 2 million tons — though exact figures remain a state secret.

The US has not reached that scale yet, but it is steadily moving toward a comparable reserve size.

The final irony: upcoming tariffs may reduce import dependence

The Trump administration is set to review US dependence on copper imports in July next year, with the potential to impose tariffs on refined copper starting in 2027.

Ironically, every ton of copper entering the country now reduces that very dependence — even before tariffs designed to promote domestic production take effect.

As of 15:10 GMT, December copper futures were down 0.5% at $5.07 per pound.

Bitcoin fell on Tuesday, extending its recent pullback as progress toward ending the US government shutdown and fresh purchases by top institutional holder Strategy Inc. failed to provide meaningful support.

The world’s largest cryptocurrency slipped 0.7% to $105,355.6 by 12:25 a.m. Eastern Time (05:25 GMT).

Bitcoin fails to react to shutdown progress or Strategy purchases

The decline came despite improving risk appetite in broader markets after the US Senate approved a bill to end the federal government shutdown. The bill now moves to the House of Representatives, which is set to debate it on Wednesday, with the Republican majority signaling its intent to pass it.

Still, the news had little impact on cryptocurrencies, as investors favored higher-risk assets such as equities. The rebound in tech stocks this week also drew capital away from digital assets.

Bitcoin saw limited benefit from Strategy Inc. (NASDAQ: MSTR) — the largest institutional holder — announcing the purchase of an additional 487 coins this week, bringing its total holdings to 641,692 bitcoins.

Jim Chanos closes short position against Strategy

Investor Jim Chanos, famous for shorting Enron before its 2001 collapse, said he closed his short position against Strategy Inc. after the company’s stock fell close to the fair value of its bitcoin holdings.

Chanos explained that his bet was based on Strategy’s shares trading at a steep premium to the value of its bitcoin assets but noted that the gap had narrowed sharply following last month’s extended selloff. He wrote on social media that the firm’s market-value-to-NAV multiple had dropped to 1.23× from 2.5× earlier this year, adding there was still room for further downside.

Strategy’s Class A shares have fallen 20.4% since the start of 2025 amid investor skepticism over its premium valuation relative to its bitcoin holdings.

Analysts: Path open for renewed rally

Despite the decline, some analysts believe bitcoin could be preparing for a new rally after Monday’s Senate vote to end the shutdown.

According to The Hill, the move is expected to conclude the longest federal shutdown in US history, injecting optimism into markets still reeling from a $20 billion liquidation on October 10.

Farzam Ehsani, CEO of crypto exchange VALR, told DL News the development “opens the door to a broader market rebound,” adding that bitcoin could target $130,000 if it breaks above $110,000 — a level he described as “the start of a new bullish cycle.”

Bitcoin now trades near $105,000. While the government has yet to formally reopen, Senate approval clears the way for a House vote expected to pass on Wednesday.

Signs of a near-term rebound

The $3.6 trillion crypto market has been moving sideways, about 5% above its early-November lows. Withdrawals from bitcoin ETFs have also paused, with the funds recording net sales of $1.2 million on Monday, according to DefiLlama.

Shutdown nears its end

The US Senate passed a bipartisan funding bill Monday night by a 60-40 vote, paving the way to reopen the government after a record 41-day closure, The Hill reported.

President Donald Trump backed the deal and is expected to sign it this week, restoring funding for key federal agencies and resuming pay for hundreds of thousands of workers.

Trump further boosted sentiment by reviving the idea of $2,000 stimulus checks financed by tariff revenues — a proposal aimed at supporting middle- and low-income households, reminiscent of the pandemic-era payments that helped ignite the last major crypto bull run.

With the shutdown’s end in sight and market optimism improving, attention now turns to Thursday’s US CPI report — a key test of whether the recovery can sustain momentum.

Investors are watching closely, as the data could influence the Federal Reserve’s December policy decision on interest rates.

CME FedWatch shows a 63% chance of a December rate cut, while Polymarket traders price the odds at 69%.

Altcoins edge lower

Other cryptocurrencies traded narrowly and mixed, lacking strong positive catalysts. Bitcoin’s weakness weighed on the broader market:

Ethereum slipped 1.6% to $3,549.22, while XRP rose 0.9% to $2.4739.

Oil prices were little changed on Tuesday as investors balanced concerns about rising global supply with uncertainty over the impact of new US sanctions on Russian crude.

Brent futures rose 35 cents, or 0.55%, to $64.41 a barrel by 11:23 GMT, while US West Texas Intermediate gained 29 cents, or 0.48%, to $60.42 a barrel.

Investors continued to assess the implications of US sanctions on Russia and their potential effect on global crude and refined fuel markets.

Sources told Reuters on Monday that Russia’s Lukoil declared force majeure at one of its oil fields in Iraq — the most significant disruption so far resulting from last month’s sanctions.

Thomas Varga, an analyst at PVM, said restrictions on Russian oil exports were keeping prices supported despite ample crude supply. He added, “The new US sanctions on major Russian oil companies and producers are hurting refined product exports, which is why heating oil, diesel, and gasoline prices are moving differently from crude.”

Diesel refining margins in Europe hit their highest level in 21 months, surpassing $31.50 a barrel on Tuesday, while gasoline margins reached an 18-month high near $21 a barrel on Monday.

However, fears of oversupply continue to limit oil’s upside.

Earlier this month, OPEC+ agreed to raise its production target for December by 137,000 barrels per day and to pause further increases during the first quarter of next year.

Commerzbank analysts wrote in a note, “The oil market faces a large surplus next year, which will likely keep prices under pressure. The main reason for this glut is the substantial expansion in OPEC+ supply.”

The bank added that OPEC+ has increased output by 2 million barrels per day since April, and the group’s readiness to unwind voluntary production cuts after the first-quarter pause could add another 1 million barrels per day in 2026.

Moreover, analysts noted that the volume of oil stored on tankers in Asian waters has doubled in recent weeks, as tighter Western sanctions reduced exports to China and India.

At the same time, global markets found some relief as the US Senate approved a deal to end the longest government shutdown in history, restoring funding for federal agencies.

The US dollar strengthened on Tuesday against both the safe-haven Japanese yen and the growth-linked Australian dollar, as investors turned more cautious toward risk and shifted their focus to upcoming economic data following the end of the US government shutdown.

In early Asian trading, the yen hit its weakest level since February, while the Australian dollar held on to part of its recent gains against the greenback.

In recent days, risk-sensitive currencies such as the Australian dollar and the British pound have recorded notable gains, while safe-haven currencies like the yen have weakened, as optimism over the imminent end of the US government shutdown boosted appetite for risk assets.

Markets Price In the End of the US Government Shutdown

Investors expect the US government shutdown to end in the coming days after the Senate on Monday approved a deal to restore funding to federal agencies and halt President Donald Trump’s campaign to shrink the government workforce.

Isabel Matheus e Lago, chief economist at BNP Paribas, said: “Our forecasts suggest the US economy remains resilient and inflation is moderating at a steady pace, which should allow the Federal Reserve to cut interest rates by 25 basis points in December and then proceed more cautiously through 2026.”

She added: “Our reading of the economic landscape shows that we’re still in a phase of low hiring and layoffs, with no clear signs of stress... but let’s see what the upcoming data reveals.”

The agreement to end the shutdown now moves to the House of Representatives, where Speaker Mike Johnson said he hopes to pass it as soon as possible — possibly on Wednesday — before sending it to President Trump for his signature.

Francesco Pesole, currency strategist at ING, said: “There won’t be a clear market direction in the coming days. The likelihood of the government reopening reduces the growth impact of the shutdown, but the resumption of US data releases carries non-trivial downside risks for the dollar.”

He added: “We believe markets are underestimating the negative risks facing the US labor market and short-term rates — and thus the dollar — through year-end.” The euro was little changed at $1.1555.

Thierry Wizman, global FX and rates strategist at Macquarie Group, said: “The bottom line is that ending the shutdown will help avoid a sharper slowdown in GDP growth and corporate earnings.”

Pound Falls, Yen Under Pressure

The British pound fell 0.40% to $1.3126 after data showed a significant slowdown in the UK labor market during the third quarter.

The dollar rose 0.10% to 154.28 yen after touching 154.495 — its highest level since February.

The yen came under renewed pressure after new Japanese Prime Minister Sanae Takaichi urged policymakers to delay further interest-rate hikes, while US officials have grown more cautious about additional rate cuts.

Meanwhile, the US dollar slipped 0.25% to $0.6520 against the Australian dollar, ending a two-day winning streak.

The Swiss franc, meanwhile, was on track for a fourth consecutive daily gain after President Trump said the US was working with Switzerland on an agreement to reduce the 39% tariff. The franc rose 0.15% to 0.8035.