Copper price hits record high as Trump tariff risks fuel rally

Copper prices surged to a new record in the US on Tuesday as traders factored in the possibility that President Donald Trump may impose import tariffs on the metal.

Copper for May delivery rose as high as $5.2255 per lb. ($11,520 per tonne) on the COMEX in New York, surpassing the previous high set on May 20, 2024.

The front-month contract has gained about 29% this year, creating an unprecedented disconnect between US prices and the global benchmark set on the London Metal Exchange (LME).

Last month, Trump ordered the US Commerce Department to investigate possible copper tariffs on national security grounds. Since then, the gap between New York and London copper prices has widened, incentivizing traders to shift copper into the US ahead of any potential duties.

Goldman Sachs and Citigroup both expect the US to impose 25% import levies on copper by year-end.

According to Kostas Bintas, Mercuria’s head of metals trading, an estimated 500,000 tonnes of copper are being directed to the US, tightening supply in the rest of the global market. He told Bloomberg that LME prices could rise above $12,000 per tonne, up from around $10,000 currently, as the shortage deepens.

China prices in backwardation

Meanwhile, copper prices in Shanghai have entered modest backwardation, signaling expectations of strong Chinese demand.

The front-month April copper contract on the Shanghai Futures Exchange closed at 81,900 yuan ($11,277.88) per tonne on Tuesday, 0.75% higher than the September contract.

However, a copper trader told Reuters that the current backwardation is mild, reflecting solid demand rather than acute supply shortages.

Two other traders noted that the pricing dynamic is also influenced by increased Chinese refined copper exports and smelter maintenance in March due to limited copper concentrate supply. Customs data showed a 119% year-over-year surge in China’s refined copper exports for the first two months of 2024.

“A lot of copper has flowed to the United States, drawn by higher prices, leading to reduced imports,” another trader said. “China also shipped more cargoes in the first two months of the year, while stockpiles continued to decline.”

(With files from Bloomberg and Reuters)