By Pratima Desai
LONDON (Reuters) -U.S. President Donald Trump‘s 50% tariff on copper has placed a record premium on prices of the metal in the United States that is likely to ease over the coming months as a stockpile created by traders anticipating the levy works through the system.
The tariffs, which Commerce Secretary Howard Lutnick said would probably be in place by August 1 or sooner, follow an investigation launched in February.
Analysts at the time had predicted the levy would be set at 25%, and that was already enough to prompt stockpiling and a 25% rise in copper prices traded on COMEX between the start of January and Monday.
Trump’s announcement on Tuesday propelled prices on U.S. platform COMEX to a record $5.6820 a lb or $12,526 a metric ton, a premium of more than $2,920 a ton over the price on the London Metal Exchange, currently around $9,600 a ton, which the market uses as the global benchmark.
“Once all the Trump-related tariff noise dies down, we expect U.S. copper prices to fall; converge with LME prices as U.S. consumption is deferred,” Panmure Liberum analyst Tom Price said. He said U.S. copper demand was weak and predicted it would drop 16% to 1.32 million tons this year compared with last year.
Uncertainty over tariffs is a major reason for lower demand as it has sapped economic growth.
The latest data on U.S. manufacturing, a driver of copper demand shows the sector contracting.
Meanwhile, U.S. inventories are very high.
Using trade data for the January to May period and bills of lading data for June, analysts at Macquarie estimate U.S. copper imports totalled 881,000 metric tons in the first half of this year compared to an underlying requirement of roughly 441,000 tons.
“This implies a 440,000 tons excess inventory build, comprised of 107,000 tons in visible COMEX stocks and 333,000 tons in unreported inventory and/or pull-forward of purchases through the industrial chain.”
AS US STOCKS RISE, LONDON METAL EXCHANGE STOCKS FALL
Some of that excess has been sent to warehouses approved by COMEX where copper stocks at 221,788 short tons or 201,203 metric tons as of July 7 have climbed by more than 127,000 short tons, or 135%, since late March when shipments from around the world started arriving at U.S. ports.
Much of the copper shipped to the United States has come from the LME, where in late June stocks fell by 66% from mid-February to nearly 90,000 metric tons, the lowest since August 2023.
Some of the copper shipped to the U.S. will be stored in U.S. free trade zones – meaning it will not clear customs – making it easier to ship out.
