Copper’s surge is just one part of the turmoil unleashed by Trump’s bid to reshape global trade and bolster defences for US domestic producers. — Reuters
New York: Copper marched past its key threshold of US$10,000 a tonne after weeks of global trade dislocation triggered by president Donald Trump’s push for tariffs on the crucial industrial metal.
Trump last month ordered his Commerce Department to investigate the nation’s imports of copper as a likely precursor to imposing duties.
Since then, US prices have spiked and traders have scrambled to send metal to America ahead of any tariffs, in turn reducing availability in the rest of the world.
Copper on the London Metal Exchange (LME) rose as much as 0.6% to US$10,046.50 a tonne yesterday – the highest level since October – while prices on New York’s Comex neared a record high.
“This is a round of cross-regional repricing triggered by potential US tariffs,” said Wei Lai, deputy trading head at Zijin Mining Investment Shanghai Co.
“Cargoes are lured to the United States, leaving other places with a shortfall. Buying sentiment is very strong.”
Copper’s surge is just one part of the turmoil unleashed by Trump’s bid to reshape global trade and bolster defences for US domestic producers.
He’s slapped 25% import levies on steel and aluminium, hit Canada, Mexico and China with duties, and has promised sweeping “reciprocal” tariffs starting next month.
The investigation into copper imports is unlikely to deliver its recommendations until later this year, but Goldman Sachs Group Inc and Citigroup Inc are among those anticipating the United States will impose 25% import duties by the end of this year.
Comex copper prices are now up 27% since the start of the year, while the LME price is about 14% higher.
The big gap has created a huge incentive for traders and producers to keep moving supplies to the United States, and more than 100,000 tonnes may be on its way.
Major commodities players including Trafigura Group and Glencore Plc are among those diverting the metal from Asia, according to people familiar with the matter.
Copper producers gained after the metal returned to the five-digit level.
MMG Ltd rose as much as 8.2%, while Jiangxi Copper Co Ltd rose 4.4% and Cmoc Group rose more than 4%.
The trade ructions have sucked the metal from the LME’s global network of warehouses, but they aren’t the only factor underpinning the global rally.
Copper typically benefits from a weaker US dollar, and the greenback has softened notably since Trump returned to the White House.
Copper also has support from tight spots in its supply chain: smelters are suffering as a frenzy of expansions has left them fighting to secure raw materials.
There have been many bold price forecasts over recent years predicated on the risk of shortages as demand from green industries expands.
Major miners such as BHP Group Ltd and Rio Tinto Group want to produce more.
While traders and investors are expected to reap profits from moving copper around, US manufacturers are paying costs that already price in a hefty tariff. Separately, aluminium premiums in the United States reached a record high last week, when Trump’s blanket 25% import duty came into force.
Copper traded at US$10,013 a tonne on the LME by 11:32am Shanghai time.
Other metals were mixed, with aluminium and zinc slightly higher and nickel down 1.6%.
The LMEX Index of six base metals reached a five-month high on Wednesday. — Bloomberg
