Aluminium, copper retreat on fears that tariffs will hit growth

LONDON: Aluminium and copper pricesretreated on Tuesday as investors worried that new U.S. tariffs and a potential global trade war will curb economic growth and metals demand.

Three-month aluminium on the London Metal Exchange (LME) was down 0.6% at $2,642.50 a metric ton by 1100 GMT, while copper dropped 1.1% to $9,344.

U.S. President Donald Trump substantially raised tariffs on steel and aluminium imports on Monday to a flat 25% “without exceptions or exemptions”, which risks sparking a multi-front trade war.

“It’s potentially quite damaging for the U.S. economy, because if you put on tariffs on everybody, on aluminium, steel and semis as well, you just damage downstream manufacturing,” said Dan Smith, head of research at Amalgamated Metal Trading.

Smith was referring to semi-fabricated aluminium because Trump’s action also extends the tariffs to downstream products that use foreign-made metal.

“Then phase two is the retaliation from other countries. U.S. imports are enormous but their exports have been growing a lot as well, so they’re still going to get hit by all this.”

London aluminium rangebound amid US tariff concerns

The U.S. is highly dependent on imported aluminium, mostly from Canada.

Prices of primary aluminium in the U.S. are based on the LME benchmark plus the Midwest premium, was last up 3% to 35 cents a lb, the highest since May 2022, after jumping by 10% on Monday. It has surged by 60% since Trump was elected.

“We expect any tariff will lead to higher prices for U.S. manufacturers. This would most likely be in the form of higher U.S. Midwest premiums rather than a sustained uplift in the LME price,” ANZ Research said.

The premium of U.S. Comex copper futures over the LME contract rocketed to a record high on Monday on fears that copper would also be slapped with U.S. tariffs.

The premium eased to $800 a ton from $930 on Monday, but it is still double the level of a week ago.

Among other metals, LME zinc dropped 1.2% to $2,813, nickel dropped 1.6% to $15,280, lead slipped 1.2% to $1,975.50 and tin ceded 0.8% to $30,900.