Tariffs Take the Shine Off Copper

Copper prices have plummeted in London, signaling anxiety after Trump unleashed sweeping tariffs across the board, threatening to dim the luster of metal markets worldwide. In a single week, copper's valuation tumbled from its lofty peak above $10,000 per metric ton to a significant weekly slump, its worst since the previous autumn, as traders braced for the impact of the trade war. With the White House sparing copper from immediate tariffs yet probing its import on national security grounds, the industry's giants are left to navigate the choppy waters of a market held captive by policy and speculation.

Copper prices in London took a notable dip, closing the week with losses, after Donald Trump's announcement of a broad set of tariffs, which cast a shadow over global demand for metals.

On Friday morning, three-month copper on the London Metal Exchange slipped by 2%, settling at $9,142 per metric ton. This marked its steepest weekly decline since early November, with a 5.93% drop.

"The looming threat of a global trade war and the potential for slower economic growth are likely to keep commodity markets under pressure," noted analysts from ANZ in a report.

Global trade tensions escalate

The situation could escalate if affected countries retaliate with their own tariffs, potentially igniting a full-blown global trade war, ANZ warned. Trump's tariff announcement was particularly tough on China and its major trading partners, with Chinese imports facing a hefty 34% tariff, raising the total new levy to 54%. In response, Beijing has promised countermeasures.

Interestingly, the White House decided to spare copper from these new tariffs, as it continues a separate investigation into potential duties on the metal. Trump directed the Commerce Department to explore the imposition of tariffs on copper imports, citing national security concerns. While the official stance is to stimulate domestic production, it also appears to be a forceful tactic to redraw the contours of international trade networks.

The scope of the US inquiry is expansive, encompassing a variety of copper-related products including blister copper, concentrates, alloys, scrap, and by-products. Some insiders suggest that these measures could be enacted in a matter of weeks, a far swifter timeline than originally thought.

Zinc and tin, were also excluded from the tariff list. Despite base metals being exempt from the new levies, the fear that these tariffs could dampen demand for raw materials is weighing heavily on market sentiment, according to ING analysts.

What a difference a week makes

Copper's fortunes have taken a dramatic turn in a short amount of time. Merely a week ago, the metal's price soared beyond the $10,000 per metric ton threshold, buoyed by the anticipation of the tariff announcement.

Source: MarketScreener

Key players in the copper industry such as Antofagasta, Freeport-McMoran, Anglo American, Glencore, Hindalco, BHP, First Quantum, and Southern Copper are now navigating this new, uncertain market environment as leading listed copper producers.