By: Gustian Farrow, Head of StoneX TV • Content Channels
Natalie Scott-Gray, StoneX Senior Metals Analyst, discusses the far-reaching impact of new US copper tariffs and the surprising market reaction.
The US administration moved forward with a 50% tariff on semi-finished copper products, such as pipes, wires, rods, sheets, and tubes. However, the decision to exclude copper input materials like cathodes and anodes from tariffs caught the market off guard. As outlined by Scott-Gray, “the vast majority of imports in the country” remain unaffected, which diverged from initial expectations based on previous section 232 rulings".
Following the announcement, COMEX copper prices suffered a record intra-day decline, dropping by more than 22% and sliding 24% over the week to their lowest level since early April. LME copper prices saw a more modest fall of 1.6%. The premium of COMEX over LME nearly vanished, dropping from $2,704/t to $43/t. Meanwhile, stocks in COMEX rose to record highs as market participants moved material into the US, and LME warehouses recorded an 11% increase in inflows.
Markets were largely unprepared for the exclusion of refined copper from tariffs. According to Scott-Gray, “it was largely if not entirely assumed refined copper would be included.” Early focus was on whether countries like Chile would receive exemptions, but the administration prioritized raw material exemptions following industry input. Future tariff measures are set to increase restrictions on copper input materials and may introduce phased tariffs on refined copper starting in 2027.
Scott-Gray forecasts a slow adjustment for US copper prices, with significant inventory likely to be worked through over 4-6 months. Longer term, “domestic US copper prices are likely to be underpinned at least at levels near parity to the global benchmark.” The LME is expected to regain its status as a global economic indicator, with attention on macro factors such as monetary policy, China’s economic health, and geopolitical tensions. Scott-Gray highlights that investors play a major role, as speculative moves “removed copper’s price performance from both macroeconomic and fundamental drivers” in 2024, and this influence is likely to persist.
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--- Written by Gus Farrow
--- Expert: Natalie Scott-Grey, StoneX Senior Metals Analyst
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Base Metals LME Report by Natalie Scott-Gray
Base Metals LME Report by Natalie Scott-Gray
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