Latest News

After Trump's tariff plan of 50%, copper prices fall outside the US

The London Metal Exchange (LME) and Shanghai Futures Exchange (SFE) saw a decline in copper prices on Wednesday, as the potential U.S. tariff on copper signaled the end of a long-running arbitrage trade which had pulled the metal off global markets.

The COMEX Copper Futures rose more than 12% on Tuesday to a new record high.

The U.S. Secretary of Commerce, Howard Lutnick, said that tariffs would be likely in place before the end July or August.

The LME's three-month contract for copper fell by 1.35% at $9,658 a metric ton as of 0700 GMT. On the SHFE, the most traded copper contract dropped 1.36%, to 78400 yuan (US$10,920.28).

The announcement was like a thunderous boom in the middle night. A 50% tariff is higher than expected.

Since the U.S. announced an investigation in February into the imports of red metal, traders have been shipping copper from warehouses all over the world in anticipation of higher prices. COMEX inventories are now at their highest levels since 2018.

These trades may be numbered, given the short time left to move copper. This could free up supply outside of the U.S.

Michael Wu, an analyst for Shanghai Metals Market said that there is virtually no one in Asia who wants to buy copper to deliver to the U.S. at this time. He added that the only shipments likely to meet the deadline are those from Latin America.

According to ING, tariffs are expected to negatively impact LME prices once they are implemented. This is because U.S. buyers will likely start to use their inventory.

Goldman Sachs stated that "as in the past, this initial higher tariff rate can be used as a negotiation anchor, followed up by concessions or exemptions".

LME tin dropped 0.68% to $33,170 per ton. Lead fell 0.39% at $2.048.5. Nickel fell 0.35% at $14,990. Zinc eased by 0.15%, at $2.716.5. Aluminium was unchanged at $2.584.5.

SHFE nickel dropped 1.2% to 119.140 yuan per ton. Tin eased to 262,890, zinc rose to 22,120, lead climbed to 17,175 and aluminium grew by 0.1% to 20.515 yuan.

Click or to see the latest news in metals, and other related stories.

(source: Reuters)