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Andy Home: Tariff threat creates rift between copper prices in the US and Europe
The market has already priced in the possibility that after steel and aluminium, the red metal could be the next to receive import tariffs. In recent days, the arbitrage between CME and London Metal Exchange (LME), has become more pronounced. The CME premium exceeded $1,000 per metric tonne earlier in the week. The market expects a minimum 10% tariff based on the current price of LME 3-month copper, which is currently around $9,400 a ton. CME premiums could rise further if Trump imposes the same 25% tariffs on imports of aluminum and steel. Doctor Copper's likely reaction to a escalating trade war and its negative impact on global growth is being overlooked. Mind the Widening Gap The CME’s U.S. Midwest Premium Contract is where the aluminium trade takes place, because the CME’s underlying contract for aluminium mirrors the LME’s international delivery status. CME copper contracts, on the other hand, are customs cleared and only have domestic delivery locations. This means that any premium associated with U.S. deliveries must be reflected in this contract. The CME premium is a good indicator of potential U.S. copper tariffs. Right now, it's trading at record-highs. It even surpasses last year’s short squeeze explosion. CME's copper stock has recovered from its depleted level that fueled the squeeze, and now totals over 100,000 tonnes. The U.S. Geological Survey reports that the U.S. consumer is highly vulnerable to tariff barriers, as the country still relies on imports to meet around 45% domestic consumption. Trump's tariff threat is causing price volatility. However, the exact level and countries against whom tariffs will be applied are still unknown. The announcement of tariffs on aluminum and the possibility of even higher duties if trading partners retaliate has spooked copper markets, forcing arbitrage to become more widespread. Damage Impact According to the USGS, the immediate focus of the trade in copper tariffs is on refined metal. This is understandable, given that the United States only imported just under 800,000 tonnes of this product in 2024 compared with the 850,000 tons of domestic production. The CME premium, which is currently a major incentive for metals to be shipped to the United States, will adjust the trade flow over time. Tariffs on copper could have a much more complicated impact, due to the complex flow of materials between the United States, Canada and Mexico, which both face 25% tariffs. Copper wire is exported by the United States to Mexico for use in automotive parts, such as electric motors and wiring harnesses. These are then sent back across the border. Analysts at Project Blue estimate that this trade represents 220,000 tons of copper per year. If high tariffs are imposed on these imports, harness assembly will likely move from Mexico to cheaper Asian countries. This would have negative effects for Mexican and U.S. automotive companies. Tariffs may cause copper scrap flows to be diverted to other countries - most likely China - at the expense of U.S. secondary manufacturing. TARIFF DRAG The interconnectedness between North American copper flows and the globalised picture is only part of the bigger, complex picture. This leaves the metal vulnerable to any shifts in trading patterns that may result from U.S. Tariffs. Doctor Copper is a title that has been given to the metal because of its importance in the global economy. The possibility of tit-fortat tariffs being imposed between the United States, and its trading partners, could have a significant impact on consumer spending. The market hasn't yet priced this in. The LME copper has increased by 7% in price since January 1, fueled by the expectation of an improved demand, especially in China. China, along with everyone else, is in the sights of the Trump administration. Copper will be affected by the tariff wars if they have started. This will reflect in the international prices rather than U.S. prices, suggesting a further fracture between CME-LME markets. These are the opinions of the columnist, an author for.
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As US inflation rises, stocks tumble and the dollar surges
The dollar and U.S. stocks rose after the data showed that consumer inflation increased more than expected in January, supporting Jerome Powell's statement that interest rates are not being cut. The Bureau of Labor Statistics of the Labor Department reported that its consumer price index increased at an annual rate of 3.3% in January. This was above expectations for a 2.9% increase. Market watchers and households alike are preparing for an increase in inflation as a result the U.S. President Donald Trump’s tariffs. After being mostly stable all day, futures on the S&P 500 index and Nasdaq fell sharply by almost 1%. The dollar rose sharply against several currencies due to a rise in U.S. Treasury Yields. Market participants believe that the Fed will only reduce rates one more time this year. Only 26 basis points are priced in for December, down 35 bps from before the data. "Tariffs place the Fed in a difficult position because they can reduce economic growth, create unemployment but also inflationary. "The Fed may be more inclined to wait and see how things settle rather than make a move until it is certain what tariff policy it will have and for how long," Charles Schwab UK's Richard Flynn, managing director said. "Hotter prices would probably keep the Fed from reducing rates sooner. This would result in a stronger Dollar." The U.S. dollar rose by 1.2% against the Japanese yen on the same day, to 154.295. The euro fell by 0.4% to $1.0322, and the pound dropped 0.5% to $1.238. The yield on the benchmark Treasury 10-year note increased by 10 basis points on the day, to 4.64%. Gold continued its earlier decline, falling by 1.1% to $2 869 per ounce on the same day. It had hit a record-high just short of $2,900 an ounce earlier in the week. Investors will be watching Powell's second semi-annual testimony closely after he told Congress on Tuesday that despite the "pretty good" state of the economy, the central bank is not in a hurry to cut interest rates further unless there was a need for inflation or if the job market was weak. The second act is usually not as popular, but today's CPI could prompt a different tone or raise different questions. The release will be compared to the expectations, said Jim Reid, a strategist at Deutsche Bank. Trump's advisors are said to have finalised plans to impose tariffs in return for any country that levies a tax on U.S. imported goods. On Monday, he announced a 25% increase in tariffs for steel and aluminum.
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OPEC maintains its global oil demand forecasts for 2025 and 2026
OPEC reiterated its prediction of a relatively strong increase in global oil consumption in 2025. It said that air travel and road travel will support consumption, and trade tariffs are not expected to affect economic growth. In a report published monthly, the Organization of Petroleum Exporting Countries (OPEC) said that the world's oil demand would rise by 1,45 million barrels a day (bpd), in 2025, and by 1,43 million bpd, in 2026. Both forecasts were unchanged since last month. OPEC believes that oil demand will continue to rise in the coming years. This is contrary to the International Energy Agency, which expects demand to peak this decade due to the switch to cleaner fuels. OPEC's report said that the new U.S. Administration of Donald Trump has increased uncertainty in the markets and could create supply-demand imbalances which are not reflective market fundamentals. However, it did not change its forecast for 2025 economic growth. OPEC stated in its report that it remains to be seen to what extent and how potential tariffs will affect the current growth assumptions. They are not expected to have a material impact on the current growth assumptions. Brent crude traded lower, towards $76 a barrel, after the OPEC release. The IEA estimates that the demand for oil will grow by 1.05 million bpd in 2025, which is lower than OPEC. However, the gap between OPEC and the IEA on 2025 has shrunk since 2024, when it reached a high due to differences regarding the pace of energy transition. OPEC+ - which is a grouping of OPEC, Russia and other allies - has been implementing a series cuts in output since the end of 2022, to support markets. The plan currently calls for a gradual increase in oil production starting April. Reporting by Alex Lawler, Editing by Elaine Hardcastle, and Tomaszjanowski.
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Storage levels are falling as a result of the German gas event.
The German gas market manager's meeting with key stakeholders at a trade show has not led to the subsidised gas auctions that could boost underground storage caverns. In the absence of progress, the biggest economy in Europe faces a question mark over its energy supply during the winter months. The country is trying to conserve funds before a general elections. The slides of Trading Hub Europe (THE) stated that a tender was not planned at this time. However, incentives for new injections during the summer months had been discussed. THE's state supervision must decide and specify these incentives. The wholesale gas market is interested in THE's action, as European gas prices for the next month are at two-year-highs due to a combination between cold weather and competition from around the world. The reversal of seasonal prices has made summer filling less appealing, which in turn has led to increased expectations that the state-mandated THE must incentivize gas purchases in order to reach a 90% target by November as stipulated in national and European law. Gas Infrastructure Europe (GIE) data shows that Germany has the largest gas storage capacity in Europe. However, its sites are only 48% filled, which is a substantial decrease from 72% at the same point last year.
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Russell: The term critical minerals is meaningless and needs a new strategy.
It is now so common to use the term critical mineral that its original meaning has been lost. It is time to create a new definition of what is truly vital for a nation and what is simply important. The Mining Indaba conference held in Cape Town last week also made it clear that what's important to one country may not be as critical to another. What is a better way to define a critical mineral than by its name? It's simply a mineral you don't possess and worry you will not be able get it in the future. You need a certain mineral, but don't possess any domestic reserves. Your strong allies don't also have enough deposits, and you do not have control over the supply chain. This is a different mineral from a core or essential mineral that commodity analysts CRU call - i.e. a mineral that you require but are confident you can source both now and in future. Why is it important to distinguish between the two? Westerners tend to view core minerals as ones that can be left to the market to supply. They rely on private mining firms to explore, develop, and produce them on commercial terms. A truly critical mineral will require a different acquisition strategy, including direct funding of new mines, strategic relationships with the host country, and offtake agreements not dependent on market prices. China has shown that it is much better at focusing on minerals they deem critical. It invests in mines, infrastructure and processing plants in other countries, and also in its own country. China is the largest importer of commodities in the world. It dominates the global supply chain of minerals essential to the energy transformation, including lithium, cobalt and nickel. These four minerals are no surprise to China, but are they still important for China, given that China dominates the production and supply of these minerals? Beijing's approach to ensuring supply was more strategic than commercial. Copper, aluminium and graphite are also included on the list of critical minerals for the United States as well as the European Union. Iron ore, gold potash, and uranium are among the critical minerals on China's list. One could argue that these minerals are critical to China's economy, and are also ones in which Beijing has little influence on the supply chain. Consider iron ore as an example. China imports over 80% of what it needs. Of those imports, more than 90% are from Australia, Brazil, and South Africa. Beijing has no control over these resources, despite its ownership of some companies that mine iron ore. It is a price taker and has been for the last two decades. NEW TACTICS NEEDED The United States and Europe could be asked why copper is included on their list of critical minerals, when there is no threat to supply. This is because most of the copper mined in the world is controlled by Western firms, in countries which are generally aligned with Western values. Aluminium and lithium are also important, but cobalt's importance for energy transition is still being questioned. Nickel is a fascinating case. Both the United States and European Union consider it critical but have not done anything to guarantee supply. They have instead allowed Chinese-controlled mining and processing plants to dominate the Indonesian market, while others in countries such as Australia, a strong ally of China's, are closed due to low prices. It would make sense to continue to supply nickel from allies, even if the cost was higher. If Western countries are truly concerned about the security of minerals like graphite and tungsten, they must change their approach to developing mines. Western mining companies have difficulty securing long-term financing because they cannot guarantee the price that will be paid in several years, when a new mine is built and operational. They lose out to Chinese firms that are less concerned about commercial results. Western governments must also become more proactive when it comes to engaging countries in resource-based relationships, using soft power like aid programmes as well as direct benefits such market access to foster stronger relationships. It appears, however, that U.S. president Donald Trump has adopted the exact opposite strategy, abandoning all aid and threatening to impose widespread tariffs against both allies and enemy alike. The European Union appears to be moving at a snail's pace. It produces policies and reports about critical minerals, but does not seem to do much to develop the supply chains that it controls. These are the views of the columnist, an author for.
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Utility Exelon's forecasts for 2025 profits are above estimates
Exelon, the U.S. utility, forecast a profit for this year that was above Wall Street expectations on Wednesday. The company expects to gain from higher electricity and gas rates. U.S. utilities are seeking to increase customer bills in order to fund infrastructure improvements. This is because the electrical grids of the United States are facing extreme weather conditions and a growing demand for electrification by industry and data centers. Exelon plans to invest an additional $38 billion over the next four-years, a 10% increase on its previous plan. Jeanne Jones, CFO, said: "With the growth of our capital plan in four years driven by investment requirements across our regions we continue to anticipate 5-7% annualized earnings growth through 2028." Exelon announced that several of its rate cases were approved by regulators, and went into effect in early this year. Rate case proceedings are used by regulated utilities to determine how much customers will pay for electricity or natural gas. According to LSEG data, the Chicago-based firm expects its 2025 adjusted operating profit to range from $2.64 to $2.74 a share. This compares to the analysts' average estimate, which was 2.63 a share. Exelon reported adjusted operating earnings per share of 64 cents for the fourth quarter ending December 31. This was above analysts' estimates of 59 cents. The shares of the company were up more than 1% before the bell. (Reporting and editing by Vijay Kishore in Bengaluru, and Shailesh Kuber)
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Maguire: The dawn of Turkey's nuclear age is crucial to its clean energy plans
The world's biggest nuclear power pipeline could help Europe, the top coal-fired polluter in Europe, boost its power output and reduce future emissions. Global Energy Monitor (GEM) reports that Turkey is developing 4,800 megawatts of nuclear power generation capacity, which is the world's third largest pipeline. There are currently no nuclear power plants in operation. Once fully operational, the plant will generate 10% of Turkey's electrical needs. The Russia-built facility, on the South Coast, has experienced numerous delays and costs overruns, raising questions about its likelihood of starting up in time for the four planned stages. The country is experiencing a rapid increase in demand for electricity, and any delay in nuclear operations could lead to an acceleration of coal-fired energy production. NUCLEAR PHASES AND SANCTIONS The first Akkuyu unit, built by the Russian State Atomic Energy Corporation Rosatom is expected to be online in this year. It has a nominal capacity of 1,200 MW. According to Akkuyu, the equipment start-up, testing, and pumping station of the pressurized Water Reactor's cooling system and pumping stations began in early January. The site also passed an independent safety examination in January. The remaining three 1,200 MW power units will be added annually in 2026-2027-2028 at an estimated cost of $20 billion. The remaining reactors can be completed on schedule, given the state of construction of the site. Rosatom reported that it was having difficulty obtaining certain parts due to the sanctions imposed on several Russian entities after Russia invaded Ukraine in 2022. The new administration of U.S. president Donald Trump could face further delays and difficulties in sourcing after the imposition by Trump of new sanctions against Russia. COAL CRUTCH While Turkey's first nuke plant is being finished, its power companies continue to run the fleet of coal-fired units, which provided around 35% the electricity in Turkey last year. According to the energy think tank Ember's report, its coal plants will generate a record of 121 terawatt-hours (TWh) in 2024. They will also emit a record of 114 million tonnes of carbon dioxide. This is the highest amount of CO2 emissions in Europe. According to Kpler, a ship tracking firm, Turkey imported around 26.5 millions metric tons (or roughly 55 million metric tonnes) of thermal coal in 2024. This was the eighth highest national import total worldwide. In Turkey, hydropower plants produced the second most electricity last year. This was around 75 TWh. Gas plants generated about 63 TWh. The volatility of gas and precipitation prices in recent years has stifled the growth in gas and hydro-fired power generation, forcing Turkey's energy firms to remain dependent on coal as the main source of power. CAPACITY CLUSTER According to Turkey's pipeline of power capacity, there is no "Plan B" in place for the Akkuyu Plant in the event that it starts late. According to GEM, the energy data organization, there is currently no new coal-fired power capacity under construction. Only 890 MW worth of gas-fired power is being built. Around 20 MW geothermal power, around 160 MW hydropower, and 250 MW solar capacity are also being built. The new additions to capacity will increase the clean energy share in Turkey's mix of capacity to 49.5%. This is up from the current 47% and reduce fossil fuels to 50.5%. The total capacity of non-nuclear power plants currently being constructed in Turkey is less that 30% of planned nuclear capacity. The lack of alternative capacity development is a sign that the country has confidence in bringing up the nuclear plants as soon as possible. The limited capacity to increase power production in Turkey without the new fleet of nuclear reactors also means that the power companies will be reliant on the fossil fuel plants they currently have until Turkey finally enters the nuclear age. The author is a market analyst at
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Ukrainian graphite mine hopes Trump deal but says returns won't come instantly
Ostap Kostyuk, the CEO of the 90-year-old Zavallivsky Graphite mine in central Ukraine, dreams of producing graphite that is pure enough to be used for lithium batteries. He compares this to trying to make a Rolls-Royce "inside a garage" due to the lack of investment. Kostyuk is sitting on Europe's largest deposit of graphite. He sees an opportunity, but admits that profits won't come fast for American investors. Kostyuk said that the challenges of extracting minerals from Ukraine are a long-term commitment. He showed me the vast facility in Kirovohrad, where he was standing in front of old heavy machinery, and every surface had a thin coating of graphite, which rubbed away when touched. The vast mineral wealth of Ukraine's undersoil is the core of the joint partnership pitch that President Volodymyr Zelenskiy made to Trump. He wants security guarantees in a deal ending the war. In response, Trump has said that he wants $500 Billion worth of Ukrainian resources. He sent his Treasury Secretary Scott Bessent this week to Kyiv in order to meet Zelenskiy. Mineral Wealth In an interview with Zelenskiy last week, he unfurled a list of Ukrainian minerals. These include lithium, graphite and titanium, all of which are essential for manufacturing high-performance magnets as well as electric motors and consumer electronic products. He stated that less than 20% (including about half of its rare earth deposits) were under Russian occupation, and emphasized the need to protect what is left. Industry experts warn that despite the trillions of dollars in mineral wealth Kyiv claims to have untapped, it may take many years before investors see significant returns from a sector still reeling from chronic underinvestment and war. Volodymyr Landa, senior economist at Centre for Economic Strategy said that it was crucial to know what the United States were interested in. Ksenia Orynchak is the head of Kyiv’s National Extractive Industries Association. She said that the mining industry has "stagnated", and there have been no inflows of funds for the nine years in which she worked. She said that at the State Service of Geology where she worked between 2017 and 2019, the government allocated only a few millions hryvnias for all of the organization's activities. At a time, simple geological exploration costs 2 billion hryvnias (48 million dollars). Orynchak also said that Ukraine's mineral resources have been classified since more than 20 years, which makes it impossible to accurately estimate what Ukraine has. MACHINERY FROM THE SOVIET ERA The Soviet-era Zavallivsky Complex, whose equipment had last been modernised in 1965 illustrates the magnitude of the challenge. The mine, though hundreds of miles away from the front line, has been in desperate need of resources ever since the full-scale Russian invasion in February 2022 prompted the Australian partner to withdraw its funding. Several of Kostyuk’s employees are either in the military, or have died fighting for Ukraine. He said that despite the setbacks his plant was already producing a product which could be purified later into battery-ready SPG (spherical spherical Graphite). Kostyuk said, "We're ready for this technology." His facility's ultimate goal is to produce its own SPG. The graphite reserves in Ukraine, which are used to make electric vehicles batteries and nuclear power reactors, account for 20% of the global resource. He said that his company is ready to supply U.S. consumers with natural flake graphite in order to establish a Ukrainian name on U.S. market, as well as to search for new deposits of the material in Ukraine. He added that new digging projects, whether they are for graphite or any other important minerals, could take between five and seven years to begin producing. Kostyuk says that his factory desperately needs to be upgraded, but his workers have the knowledge and skills to make a big leap if they are given the right resources. He said, "I believe in the factory and in these people." "Everyone here wants to be at work." ($1 = 41.8330 hryvnias). (Editing by Tom Balmforth, Alex Richardson and Tom Balmforth)
Trump prepares reciprocal tariffs amid trade war fears
Donald Trump's advisers on trade were finalising plans for the reciprocal duties that the U.S. President has promised to impose against every country which charges duties on U.S. imported goods, raising fears of an expanding global trade war.
Separately the trade ministers from the 27 countries of the European Union are due to meet by video conference to decide their response to the European Commission President Ursula von der Leyen's statement that tariffs against the EU "will not be ignored".
Trump shocked the markets on Monday with his decision to impose tariffs starting March 12 on all imports of steel and aluminum. Mexico, Canada, and the European Union condemned the plans, while Japan, Australia, and other countries said they wanted exemptions.
Industries that depend on imports of steel and aluminum scrambled to reduce the expected cost increase.
Trump announced last week that he would impose an additional 10% tariff for Chinese goods starting February 4. Chinese countermeasures will be implemented this week.
He delayed the 25% tariff on goods coming from Mexico and Canada by a month, until March 4, to allow for negotiations about steps to secure U.S. border security and stop the flow of fentanyl.
Many U.S. workers have welcomed the metal tariffs imposed on Monday, but manufacturing-heavy companies are deeply concerned about the next steps. They warn that the tariff increase will reverberate throughout supply chains and affect all businesses who rely upon the materials.
Ahold Delhaize, a supermarket chain, and Siemens Energy have warned that tariffs will lead to higher prices because they want to pass on additional costs from imports.
Steelmakers in Europe are also concerned that U.S. Tariffs could lead to an influx of cheap steel into Europe. French steelmaker Aperam
If that happens, Brussels will intervene and curb imports. Austria's specialty steelmaker voestalpine
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On the EU to immediately take countermeasures
Australia's Industry Minister meanwhile stated that the U.S. Tariffs will not derail Australia's plan to increase "green" aluminum exports.
Ed Husic: "The world is in high demand for aluminium. We need it to transition to net zero."
Reporters at the National Press Club, Canberra. "Our American friends, do you want to pay more money for this product you have a high demand for?"
MONUMENTAL UNDERTAKING
White House officials are being tight-lipped regarding the timing or structure of the next tariffs. One source has said that the announcement could come later this week.
Trump announced on Monday that he will announce reciprocal tariffs within the next two business days for all countries who impose duties on U.S. products. He also said he is looking into separate tariffs for cars, semiconductors, and pharmaceuticals.
Experts in trade say that structuring the reciprocal duties Trump wants presents big challenges to his team. This may explain why the latest tariffs were not announced Tuesday.
William Reinsch said Trump officials can choose between a simple 10% or 20% flat tariff rate or a messier option that requires separate tariff schedules that match U.S. rates to those of other countries.
A source who tracks the work on tariffs reported that details are still being worked out as late as Tuesday.
Damon Pike is a principal and trade specialist with BDO International's U.S. division. He said that the reciprocal tariffs Trump envisaged would be a massive undertaking given that the 186 member countries of the World Customs Organization have different duty rates.
"At an international level, you'll find 5,000 different product subheadings at the 6-digit level. That's 5,000 times 186 countries. "It's like an artificial intelligence project," said he.
Trump could also use the International Emergency Economic Powers Act to justify tariffs on China, and those pending against Canada and Mexico.
Pike added that, without IEEPA's help, it would take some sort of agency action before trade remedies could be imposed. "But everything seems to move quickly," he said.
Reinsch stated that imposing reciprocal tariffs also ceded the control of U.S. tariff rates to other countries.
"For instance, if Colombia had a high coffee tariff to protect their industry, we'd put a similar high tariff on Colombian Coffee, even though we do not grow coffee. "The only ones who would suffer are the U.S. consumer," he said.
(source: Reuters)