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Trump's scrap-copper quotas are too small to affect the market

Analysts say that proposed limits on U.S. copper scrap exports, which are intended to reduce the reliance on foreign production, will not have a significant impact as exports are already below the cap.

Copper is an essential material for power generation, transmission and artificial intelligence industries. It can also be used in data centres and electric vehicles.

The White House announced new tariffs on Wednesday. It said that it would require 25 percent of the high-quality scrap copper produced in the U.S.A., which is the largest scrap exporter in the world, to be sold domestically. This was done to increase the production of refined, copper from scrap.

The executive order didn't define high-quality, nor did it specify when domestic use would be required. However, a separate report by the Secretary of Commerce stated that the requirement for domestic use would start in 2027.

Goldman Sachs analysts wrote in a note published on Thursday that trade flows would not change because "high-quality scrap is likely kept in the country already."

Duncan Hobbs is the Research Director for commodity merchant Concord Resources. He said: "If we look at the copper scrap markets as a group, there's not much to see because the US already consumes upwards of 40 percent of copper scraps in its own metal manufacturing."

Last year, the United States exported copper scrap worth $4.5 billion. Around half of that amount went to China. Exports to China, the United States' largest customer, have fallen sharply since the trade war began. This has masked any impact of Trump's new proposal.

According to U.S. Customs data, the value of scrap copper exported to China in may was just $7.4 millions, down from $248.9 million a year ago.

Chinese customs data revealed that the volume share of China’s scrap copper imports to the US fell from 20,8% in January to 1% in July.

(source: Reuters)