I US tariffs on copper imports could arrive within a few weeks, anticipating the previous deadline by a few months. The copper traded in New York has jumped to levels record, while the spread with the price at has widened London. Copper-related stocks rise.
U.S. President Donald Trump in February ordered the Department of Commerce to open an investigation into potential copper tariffs and submit a report within 270 days. Instead, the issue is now expected to be resolved much sooner, according to Bloomberg. According to some sources, the investigation now appears to be little more than a formality, given that Trump has repeatedly stated that he wants to impose tariffs and the administration is moving quickly with the review.
“You will see that our new Secretary of Commerce, Howard Lutnick, will move in what I like to call the ‘Trump pace,’ which is as quickly as possible to get the results of the investigation to the president’s desk for possible action,” White House trade adviser Peter Navarro said in February.
Trump threatened to impose a tariff up to 25% also on all copper imports, a move that could upend the global market for one of the world's most popular metals, used in pipes and electrical cables. The planned taxes are part of a broader effort to increase domestic production of essential minerals, following emergency measures introduced last week to accelerate the development of new metals and mining projects. However, building new copper capacity could take years, and in the meantime, tariffs will leave U.S. producers paying much more for the metal than rivals abroad.
Price gap between London and New York widens
Il copper on the New York Comex rose to 3,1% at a record of $5,3740 per pound, before paring those gains and trading at $5,2815. The benchmark price on the London Metal Exchange fell as much as 2,2% to $9.893 a tonne, widening the gap between the two contracts to more than $1.700 a tonne.
L'large price differential between London and New York has created a global race among traders and retailers to ship the red metal to America to grab a lucrative prize. Such a move has left the rest of the world, especially the major consumer China, short of copper. The decline in copper prices in London reflects a reduced expectation of tension, as traders may not have enough time to ship more metal to the U.S. before the tariffs are imposed, said Li Yaoyao, an analyst at Xinfu Futures Co. “The question is how many weeks will the tariffs take effect,” Li said.
Goldman Sachs expected a 25% copper tariff to be implemented between September and November, analysts said in a note sent today. With tariffs now likely to come sooner, the gap between Comex and LME prices, which is currently around 17%, is likely to expand further, they said.
“Given the uncertainty over the tariff level and high US inventories, we think an implicit 20% tariff should be the limit in the near term,” wrote analysts including Eoin Dinsmore. “This has also been a level regularly cited as a good exit point in numerous client meetings.”
Mining companies move higher
Meanwhile, in China, copper-related stocks rose: Zijin Mining (1,3%), North Copper (8%), Jianxi Copper (4,4%), Yunnan Copper (1,2%) and Hangzhou Iron & Steel (1,4%). Companies linked to the extraction and processing of metals are also on the rise: DH Heavy Industries (6,7%), Jiangsu Nanfang (10%) and RongFa Nuclear Equipment (4,1%). Mining companies listed on European markets are also on the rise, such as BHP Group, Rio Tinto, listed on the London Stock Exchange, Eurasian Resources Group in Luxembourg, and the Swiss Glencore.
