Copper Prices Plummet as Tariff Uncertainty Bites

Copper prices have retreated as traders reassess the likelihood of tariffs on refined copper imports. According to Reuters, officials are still weighing the risks of imposing such tariffs, which could raise manufacturing costs in the US. As a result, the market is unwinding some of the 'ship it to America' trade that had driven up copper prices and led to a supply squeeze.

The London Metal Exchange's cash contract has flipped to a $13.5-a-ton discount versus the three-month benchmark, indicating less concern about immediate shortages. Meanwhile, COMEX warehouse stocks have climbed to a record 696,259 tons as the US premium starts to fade.

This development suggests that if tariffs don't materialize, metal sitting in US warehouses could be re-offered into the global market, pushing US and global prices back toward each other. Market observers are now watching the 'spreads', the price difference between near-term and later contracts, and the COMEX-over-LME premium for clues on whether the stockpile is becoming stuck in the US or starts leaking back out.