As anticipated, US President Trump’s announcement of fifty% import tariffs on Copper has led to turmoil on the affected market. The worth of Copper traded on Comex rose to a peak of virtually 590 US cents per pound (equal to $13,000 per ton). The worth on the London Metallic Alternate, alternatively, got here below strain, with the US value now buying and selling at a premium of virtually 30% to the LME value, Commerzbank’s Head of FX and Commodity Analysis Thu Lan Nguyen notes.
Excessive tariffs on Aluminium could result in demand destruction
“The divergence in costs will be defined by the idea that US Copper provide will turn into scarcer because of the prohibitively excessive tariffs. In line with the USGS, the US imported 45% of its Copper consumption final 12 months, with Chile being the first supply of refined Copper, accounting for 65% of imports. The US would subsequently need to just about double its home manufacturing. That is unlikely to be attainable in such a short while. Switching to secondary manufacturing can be prone to be tough, as this at the moment accounts for a negligible 4% of US Copper manufacturing (based mostly on USGS information for 2024).”
“The tariffs are subsequently extremely prone to result in a decline in US Copper demand. A US Aluminium affiliation had additionally warned that the equally excessive tariffs on Aluminium would most certainly result in demand destruction. Decrease US imports would in flip improve the availability of Copper exterior the US, which explains why the worth on the LME is below strain. Nonetheless, the market is anticipating this growth.”
“Within the brief time period, US firms are prone to attempt to ship as a lot Copper as attainable to the US earlier than the 1 August deadline. The discount in inventories on the LME and SHFE might subsequently decide up pace once more and assist the LME Copper value, at the very least quickly. Nonetheless, a countermovement is to be anticipated from 1 August on the newest, when the tariffs take impact. We subsequently anticipate the Copper value on the LME to fall additional to $9,500 per ton.”
