Copper Market Reacts to Impending US Tariff
Prices Fall as **Trump** Administration Policy Nears Implementation
A proposed 50% tariff on copper imports by the **Trump** administration is already impacting markets, leading to a contraction in opportunities for profit and a shift in global copper dynamics.
Key Development
The anticipation of tariffs has diminished the profitability of capitalizing on price discrepancies between the United States and London markets. Due to shipping times from Europe and Asia, there’s increased risk of shipments arriving after the tariffs take effect.
The London Metal Exchange (LME) witnessed a significant reduction in major spreads after a period of stock depletion caused by increased shipments to the U.S.
LME Price Decline
Notably, at the LME, copper spot prices have dipped below three-month prices, marking the first such occurrence in approximately a month. This shift signals a rapid decrease in demand for copper inventory within LME-designated warehouses. Furthermore, the spread (tomness spread) for next-day and subsequent-day items has turned negative.
Market Impact
On July 9th, LME copper prices concluded trading at $9,630.50 per ton, reflecting a 1.6% decrease from the previous trading day. Recent data from the U.S. Geological Survey indicates that the average annual growth rate of refined copper consumption has been about 3.1% in recent years (USGS, 2024).
The impending tariff has led to a rapid unwinding of the previously tight copper supply situation, which had been fueled by expectations of rising prices in the U.S. market.
