LONDON - The premium paid to ship copper to the US fell sharply on Thursday after Reuters reported that Washington's plans to impose a tariff on imports of the metal had stalled.

With copper prices at record highs, the White House is hesitating over tariffs on concerns they could raise manufacturing costs, offsetting the potential benefits of encouraging more domestic mining, Reuters reported.

Benchmark copper on the LME was down 3% to $14 329.50 a ton at 11:20 GMT after earlier hitting a record high of $14 875, while prices on the US COMEX exchange were down 4.7% to $6.49 a lb or $14 308 a ton.

COMEX copper has been trading well above the LME contract for months as traders shipped metal to the US before a possible 15% tariff from the start of 2027.

Traders and producers have been sending copper to the US since February last year when President Donald Trump ordered an investigation into the potential for import tariffs.

The drop shows just how long the market was, said one copper trader.

"The US administration is well aware of the distortions created by tariff uncertainty, one consequence of which has been a rapid build in domestic copper inventories," said George Griffiths, head of markets at AMT Futures.

"However, recent price action is forcing the administration to confront the uncomfortable reality of the pass-through to inflation, particularly with crude around $100 a barrel," Griffiths added.

The front-month COMEX-LME copper spread, for delivery in October, fell by around $200 a ton at times on Thursday, turning negative in volatile trade.

It was last trading at minus $20 a ton, making shipments to the US uneconomic.

Bumper shipments to the US have seen copper stocks in COMEX warehouses in the US rise for 57 consecutive days to a record 767495 short tons, or 696 259 metric tons. Macquarie estimates it would take years for that amount of metal to be consumed domestically.

Much of this copper has come from London Metal Exchange registered warehouses.

The news also narrowed the premium or backwardation for nearby copper contracts against longer-dated forwards. The premium for the cash over the three-month forward was last at $5 a ton compared with $41 on Wednesday.