U.S. copper prices collapse to a record due to Trump's unexpected softness on duties

Copper quotations in the U.S. experienced the sharpest drop in history after President Donald Trump announced new duties. They turned out to be much softer than traders had anticipated. The market was preparing for a levy on all imports, but the White House made an exception for unprocessed copper. This concession collapsed the premium formed on expectations of tougher measures.

After the announcement of duties, copper futures on the U.S. Comex exchange collapsed by 20%, which was the largest intraday drop in the history of trading, write Bloomberg. As a result, the premium to global prices of the London Metal Exchange (LME), which was as high as $3,000 per ton in anticipation of tough measures, fell to $104, counted by Reuters. On the LME itself, copper prices were little changed on the morning of July 31, reported the agency.

According to a statement from the White House, the U.S. will impose a 50 percent duty on imports of semi-finished and finished copper products starting August 1. Copper pipes, wires, rods, sheets, as well as goods with high copper content: fittings, cables and electrical components will fall under the duty. However, the duties will not affect lightly processed raw materials, including copper ores, concentrates and cathodes, the most widely imported form of the metal, notes S&P Global. In addition, if the goods are already subject to auto duty in the U.S., copper duty will not be charged additionally.

Representatives of the mining industry took the news with relief. Chile's Codelco, one of the world's largest copper producers, called the White House decision "a victory for miners" and "good news for Chile, for Codelco and for our customers in the United States." Canadian Mining Association head Pierre Gratton noted that the decision was "far less bad than anyone could have expected," but emphasized that it would hurt producers and exporters of high value-added copper products in the U.S.

StoneX analyst Natalie Scott-Gray called the exclusion of raw materials from duties "a big surprise for the market." She said it would drive down domestic U.S. copper prices and bring them closer to global prices. The U.S. Copper Development Association (CDA), which represents producers, praised the Trump administration, saying the announced measures are "highly consistent with the decisions recommended" by its members.

The threat of U.S. duties on all types of copper, from raw materials to finished products, triggered a rush of demand and a sharp rise in prices for the metal in the United States relative to world prices. Traders until the last moment continued to divert shipments of copper into the country in an effort to get it in before the duties were announced. This has led to a buildup of huge inventories of the metal in the United States, and the market may now face U.S. importers having to ship excess copper back.  In the words of StoneX's Scott Gray, though, reversing trade flows will take time

This article was AI-translated and verified by a human editor