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Aluminium and copper prices are tightened by US tariff uncertainty

The prices of aluminium and copper were largely unchanged on Thursday, as the markets assessed the impact President Donald Trump’s decision to impose tariffs of 25% on imports of steel and aluminum starting March 12.

The London Metal Exchange's (LME) three-month aluminium was down by 0.2%, at $2,616 per metric ton, as of 1049 GMT. Copper, however, rose 0.2%, to $9,475.50.

The vast majority of the aluminium used by the U.S. comes from Canada. The majority of Canadian aluminium comes from Quebec. On Wednesday, Quebec's Premier Francois Legault said that Canada could consider export tariffs for products such as aluminum "where it really needs us".

The price of copper has not changed in the U.S. yet, but after Trump announced tariffs for the metal late last month, the premium between the U.S. Comex contract and the LME contract soared to a new record earlier this week.

The tariffs on steel and aluminum of 25% were announced this week as an extension to Trump's Section 232 tariffs from 2018, which were aimed at protecting domestic producers of steel and aluminum on national security grounds.

Marcus Garvey is the head of commodities strategy for Macquarie. He said that the same mechanism would not allow tariffs to be applied to other commodities quickly, because it would require an investigation by the Department of Commerce.

He added that "this suggests recent volatility in CME-LME Copper Spread... was likely to have exceeded normal levels, although prices remain susceptible to either blanket or country specific tariffs which would impact a significant portion of U.S. Imports."

Last week, Trump deferred a 25% tariff for goods coming from Mexico and Canada to March in order to negotiate steps to secure the U.S. border and stop the flow of fentanyl.

LME zinc dropped 0.2% to 2,857.50 per ton. Lead rose 0.7% at $1,987, and tin increased 0.5% to $31,640.

The price of nickel fell 0.6% to $15,325 after stocks in LME registered warehouses (0#MNISTX-LOC>) rose to 180,900 tonnes following the delivery of 5,094 tons. (Reporting from London by Polina Devlatt; Additional reporting by Violet Li, Editing by Kirsty Donovan).

(source: Reuters)