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Andy Home: Copper market is wary of the US tariffs that will follow.

Andy Home: Copper market is wary of the US tariffs that will follow.

Since President Donald Trump's February order to investigate U.S. imports of copper, the price of copper has been rising. How long will this last, and how difficult will it be to come down?

It's a race to get as much copper through U.S. Customs as possible before tariffs are implemented. Copper tariffs will come, there's no doubt about that. The question is when and at what level?

Bets are that the copper levies would be 25 percent, which is the same rate as imposed on steel and aluminum imports.

The market believed it had 270-days, which is the maximum time for a Section 232 investigation. It's no longer so sure.

The impact of wider reciprocal trade tariffs, due to be announced Wednesday on what Trump has called "Liberation Day", is uncertain.

The confusing and conflicting tariff situation has divided market opinion. Some analysts have called for higher copper price, while others warn of an impending crash.

'TRUMP TIME'

The CME spot price of copper reached a record high of $5.199 per lb, surpassing its previous peak of $4.199 during the May 20,24 squeeze.

The London Metal Exchange cash price only reached $10,100 per ton. This is a far cry from its peak in May 2024 of $10,900.

Bloomberg reported that tariffs could be implemented in weeks, not months as expected.

This possibility should not have been a surprise. Peter Navarro, White House Trade Advisor, said that at the time the Section 232 announcement was made the investigation would be finished "in Trump's time".

The apparent confirmation that "Trump Time" is a thing has left traders confused about the best time to ship physical copper to the U.S.

PHYSICAL FLOODS

According to Mercuria, up to half a a million tonnes of copper may be headed to the U.S. in order to take advantage of the unprecedented arbitrage opportunities.

Will it arrive in time?

Physical arbitrage is complicated due to the CME's restrictive list of acceptable delivery brands.

Since February's Section 232 declaration, LME stocks have dropped from 258,425 to 106,900 tonnes, and around half the total inventory is now awaiting physical loading-out.

The LME's warehouse system is a mix of Chinese and Russian steel, so it's unlikely much of it will reach the U.S.

LME stocks are instead diverted to buyers who are willing to exchange the South American brands of copper that dominate the CME list of good-delivery.

It may take more time than you think to switch locations and brands in the physical supply chain.

BULLS AND BEARS

If copper tariffs were to arrive sooner than expected, the pull of copper towards the U.S. could be less strong and last shorter than anticipated.

This means that any shortages in other parts of the world will also be less severe than expected.

The markets are bracing themselves for the uncertainty that will be caused by the U.S. reciprocal trade tariffs, which are expected to be announced in the coming week.

The way micro- and macro-tariffs interact on the copper market has divided opinion.

Goldman Sachs remains in the bulls' camp and has maintained its forecasts of LME copper prices for three, six, and twelve months at $9,600 per ton and $10,700.

Citi has, on the other hand, cut its short-term forecast of $10,000 per ton to $9,500 and expects an average price of $8,800 for the second half.

BNP Paribas is still too optimistic. They predict a price drop to $8,500 a ton as soon as the copper tariffs come into effect and arbitrage trading stops.

You're not alone if you have questions about copper.

The price outlook is still unclear until Doctor Copper and the rest of the world get more clarity about Trump's tariffs.

Do not hold your breath.

These are the opinions of the columnist, an author for.

(source: Reuters)