Going up: Copper pipes are displayed in a home rebuilding store in New York City. US copper demand is predicted to drop 16% to 1.32 million tonnes this year compared with last year. — AFP
LONDON: US President Donald Trump’s 50% tariff on copper has placed a record premium on prices of the metal in the United States that is likely to ease over the coming months as a stockpile created by traders anticipating the levy works through the system.
The tariffs, which commerce secretary Howard Lutnick said would probably be in place by Aug 1 or sooner, follow an investigation launched in February.
Analysts at the time had predicted the levy would be set at 25%, and that was already enough to prompt stockpiling and a 25% rise in copper prices traded on Comex between the start of January and Monday.
Trump’s announcement on Tuesday propelled prices on US platform Comex to a record US$12,526 a tonne, a premium of more than US$2,920 a tonne over the price on the London Metal Exchange, currently around US$9,600 a tonne, which the market uses as the global benchmark.
“Once all the Trump-related tariff noise dies down, we expect US copper prices to fall; converge with LME prices as US consumption is deferred,” Panmure Liberum analyst Tom Price said.
He said US copper demand was weak and predicted it would drop 16% to 1.32 million tonnes this year compared with last year.
Uncertainty over tariffs is a major reason for lower demand as it has sapped economic growth.
The latest data on US manufacturing, a driver of copper demand shows the sector contracting. Meanwhile, US inventories are very high.
Using trade data for the January to May period and bills of lading data for June, analysts at Macquarie estimate US copper imports totalled 881,000 tonnes in the first half of this year compared with an underlying requirement of roughly 441,000 tonnes.
“This implies a 440,000 tonnes excess inventory build, comprised of 107,000 tonnes in visible Comex stocks and 333,000 tonnes in unreported inventory and/or pull-forward of purchases through the industrial chain.”
Some of that excess has been sent to warehouses approved by Comex where copper stocks at 221,788 short tonnes or 201,203 tonnes as of July 7 have climbed by more than 127,000 short tonnes, or 135%, since late March when shipments from around the world started arriving at US ports.
Much of the copper shipped to the United States has come from the LME, where in late June stocks fell by 66% from mid-February to nearly 90,000 tonnes, the lowest since August 2023 .
Some of the copper shipped to the United States will be stored in US free trade zones – meaning it will not clear customs – making it easier to ship out.
The copper stored in COMEX warehouses, which operate on a duty-paid basis, will be more challenging to ship, but not impossible. — Reuters
