Copper glut driven by tariff threat to pop US price bubble

US 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.

- PRATIMA DESAI

The tariffs, which Commerce Secretary Howard Lutnick said would probably be in place by Aug 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 from the start of January through July 7.

Trump's announcement on July 8 propelled prices on US platform Comex to a record $5.6820 a pound, or $12,526 a metric tonne, a premium of more than $2,920 a tonne over the price on the London Metal Exchange, currently around $9,600 a tonne, which the market uses as the global benchmark.

"Once all the Trump-related tariff noise dies down, we expect US copper prices to fall; converge with LME prices as US consumption is deferred," Panmure Liberum analyst Tom Price said.

He said US copper demand was weak and predicted it would drop 16% to 1.32 million tonnes this year compared with last year.

Uncertainty over tariffs is a major reason for lower demand as it has sapped economic growth.