Copper Prices Soar as Tariff Threat Looms Over Global Supplies
The copper market is experiencing an unexpected surge in prices, despite a reported surplus of the metal. Three-month copper on the London Metal Exchange has risen to as high as $14,343 per metric ton, within striking distance of its all-time record of $14,527.50. This increase can be attributed to the prospect of US import tariffs, which are causing inventories elsewhere to dwindle.
Analysts say that the rally in copper prices reflects a shortage of the metal available outside the US, rather than a global deficit. The incentive to ship copper into COMEX warehouses ahead of a potential tariff has drained inventories elsewhere, leaving what was expected to be a surplus market looking far tighter in practice.
According to CRU principal copper analyst Robert Edwards, if US imports continue at their current rate, the market will appear to be in deficit. This is because COMEX inventories have risen for 46 straight days to a record 675,185 metric tons through an arbitrage trade that capitalises on higher COMEX prices.
Glencore CEO Gary Nagle believes that any announcement on tariffs will lead to lower prices, as the market will finally have better clarity on the situation. However, Macquarie strategist Alice Fox sees greater downside risks for copper and predicts that prices would 'massively spike' if President Trump proceeds with a tariff.