President Donald Trump’s implementation of a 50% tariff on copper imports, starting August 1st, has drawn significant attention to the metal market. Following the announcement, US COMEX futures saw an increase of 2.65% on Thursday, and they continued to rise on Friday, although some earlier gains were lost. On Wednesday, US copper prices jumped 13%, marking the highest daily increase since Trump first imposed import rules in 1989. Copper prices for one-year futures reached $9,700.50 per tonne, recovering 0.73% as of Friday afternoon, in the wake of the tariff announcement.
The widening price gap between US copper and global prices has been noted, as nearly half of the copper used in the US is imported. This situation has prompted buyers to rush imports in anticipation of the tariffs. Macquarie analysts reported that copper imports totaled 881 metric tons in the first half of the year, based on trade data and shipping logs, compared to a demand of around 441 metric tons. They calculated that this results in a build-up of around 440,000 tonnes in inventory, comprising 107,000 tonnes of visible comex stocks and 333,000 tonnes of unreported inventory.
Historically, US copper imports have rarely dipped below 36,000 tonnes each month. With a current import demand of approximately 74,000 tonnes, analysts suggest it could take about nine months to work through excess stocks. Copper is a vital component for various products, including semiconductors, aircraft, data centers, lithium-ion batteries, and electric vehicles. In a post on Truth Social, Trump pointed out that copper is the “second most used material by the Department of Defense.”
Carlos Miguel Gutierrez, the former US Secretary of Commerce, remarked on CNBC that the US’s reliance on copper imports reveals fragility. He stated that developing domestic copper production capacity could take a decade, and predicted that global prices might rise to $8,800 over the next three months.
With the fluctuations in copper prices and the ongoing geopolitical discussions about tariffs, some investors are cautious. The founding partner of Hamilton Capital Partners, based in the US, mentioned avoiding metal investments for now, while noting that US prices could benefit from margins amid a strong demand due to the energy transition. Despite some analysts anticipating a short-term price correction in the range of high fours to low fives, others believe spending around $5 per pound for copper might still be considered a “good value” over time.
