Donald Trump’s vow to impose 50 per cent tariffs on copper imports left the market for the world’s most important industrial metal reeling on Wednesday.
Although US copper prices shot higher after the US president delivered his threat on Tuesday, the global price on the London Metal Exchange sank on Wednesday as traders bet that tariffs would ultimately hit demand for the metal.
“Eventually, physical demand growth for copper worldwide will come under pressure, as downstream players seek to defer consumption,” said commodities analyst Tom Price at Panmure Liberum.
The US imports about 60 per cent of its copper, with the rest met by domestic mines or recycled scrap.
Stocks of copper on New York’s Comex exchange had earlier hit record highs this month on expectations that Trump would eventually target imports. The metal is widely used in electronics, construction and industrial equipment.
Prices for the metal on the Comex surged 13 per cent to a new record high of $5.69 a pound ($12,547 a tonne) on Tuesday, leaving them about 25 per cent higher than those on the LME.
“The reaction in the copper market to Mr Trump’s announcement was fast and furious,” said Ed Meir, a consultant to Marex, a commodities broker, adding that a 50 per cent tariff would be a “massive hit” for US consumers.
Howard Lutnick, commerce secretary, said in a CNBC interview on Tuesday that he expected the duties to be put into place as soon as the end of this month.
Traders said that this year’s rush to get copper into the US would probably slow, with shipments set to arrive after August 1 likely to be rerouted to avoid the tariff hit.
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