US copper widens premium against global benchmark after Trump’s 50% tariff plan

LONDON: U.S. copper futures widened their premium to the London benchmark on Wednesday, reflecting U.S. President Donald Trump’s plan to impose a 50% import tariff on the metal that would be a pivotal moment for the market if implemented.

“I believe the tariff on copper, we’re going to make 50%,” Trump told reporters at a White House cabinet meeting on Tuesday. According to U.S. Commerce Secretary Howard Lutnick, the tariff would likely be in place by August 1 or even earlier.

The premium of the most active COMEX copper futures contract to the three-month copper contract on the London Metal Exchange that serves as the global benchmark jumped to 27% on Wednesday from 13% before Trump’s announcement.

“This is a watershed moment for the copper market in 2025 as the imminent flagged tariff implementation should abruptly close the window for further significant U.S.-bound copper shipments,” analysts at Citi said in a note.

LME copper fell 1.9% to $9,603 per metric ton by 0941 GMT after hitting $9,553.5, its lowest since June 13. COMEX copper, hit a record high on Tuesday, but was last down 2.7% to $5.534 a pound.

Growth concerns weigh, but dollar helps buoy copper prices

The COMEX-LME arbitrage remained below the planned 50% rate as the market awaited more clarity on what copper products and what suppliers the import tariff would affect.

“As with previous tariffs, this higher initial tariff rate could be used as a negotiating anchor, followed by concessions or exemptions,” Goldman Sachs said.

The biggest copper suppliers to the U.S. - including Chile and Canada - could eventually secure a lower 25% rate, Citi said.

Massive inflows of copper to the U.S. since Washington started its investigation into potential copper tariffs in mid-February have also limited the immediate effect of tariffs for U.S. copper consumers - construction, electronics and transportation sectors.

Traders have shipped copper from warehouses around the world to the U.S. over the last five months, raising COMEX inventories to a seven-year high.

“The U.S. market is awash with copper, which now will need to find a buyer again,” said Carsten Menke, an analyst at Julius Baer.

These expectations and daily LME data showing an inflow of 4,625 tons to the copper stocks in the LME-registered warehouses eased the accumulated tightness in the LME system.

The spread between the LME’s cash copper contract over the three-month one was last at a discount of $2 a ton compared with a premium of $51 on Tuesday and a premium of $320, the highest level since November 2021, less than two weeks ago.

LME aluminium fell 0.2% to $2,580.50 a ton, zinc rose 0.2% to $2,725.50, lead lost 0.9% to $2,038, tin slipped 0.6% to $33,120 and nickel climbed 0.1% to $15,045.