LONDON: Copper prices eased on Thursday after US President Donald Trump announced 25% tariffs on auto imports, which could dampen metals demand.
Benchmark three-month copper on the London Metal Exchange (LME) was down 0.9% at $9,840 a metric ton at 1030 GMT, after touching its highest in nearly 10 months in the previous session.
Global equity markets slumped, especially automaker stocks, after Trump late on Wednesday announced the auto tariffs.
“It does seem like that could damage demand for autos and therefore all the metals that are used in autos. So that’s hurting copper prices and other base metal prices today,” said Nitesh Shah, commodity strategist at WisdomTree.
“We just don’t know how quickly new tariffs will be thrown in … this causes a lot of uncertainty for the base metal market.” The expectation of Trump imposing tariffs on copper has led investors to bid up prices, especially on the US Comex exchange.
LME copper has gained 12% so far this year, while Comex has surged 30%. US Comex copper futures dipped 0.1% to $5.23 a lb, after hitting a record peak on Wednesday. The premium of Comex over LME prices was last at $1,694 a ton, or 17%.
“Once there is clarity around tariffs, this will subside as demand from (the) US will soften and that will weigh on prices,” said ANZ Commodity Strategist Soni Kumari.
Copper on the Shanghai Futures Exchange slid 1.03% to 81,560 yuan ($11,229.21) a ton. Citi Research forecast that a 25% US copper import tariff would be imposed in the second quarter of this year and lowered its three-month price outlook to $9,500 per ton, down from $10,000.
Among other metals, LME aluminium fell 1.2% to $2,575 a ton, lead dropped 1.1% to $2,069, zinc eased 1.5% to $2,911.50, nickel gave up 0.5% to $16,160, tin dipped 0.1% to $35,055.
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