Copper prices rise above $4.85 per pound as fears of new tariffs on steel, aluminum, and possibly copper grow. Learn why investors are concerned and how China’s economy plays a role.
Copper Prices Climb Again
Copper prices went up on Wednesday, reaching over $4.85 per pound. This increase came after a drop in prices the day before, as worries about new tariffs made investors nervous.
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Why Are Investors Worried?
People who invest in copper are concerned because President Donald Trump set a deadline of June 4 to increase tariffs on steel and aluminum imports. Tariffs are extra taxes on goods coming into a country, and they can make things more expensive. Some investors think copper might be next on the list for these tariffs. The US is looking into copper imports, which adds to the uncertainty.
A Big Drop Happened Before the Rise
On Tuesday, copper prices fell sharply. This was because people were worried that fewer people might want to buy copper. When demand for something goes down, its price often drops too.
What’s Happening in China?
China, a huge buyer of copper, is also affecting prices. A recent survey showed that manufacturing in China slowed down unexpectedly in May. Manufacturing is when companies make things, like cars or electronics, and copper is used in many of these products. The survey, called the Caixin Manufacturing PMI, focuses on smaller companies that sell goods to other countries. It showed the lowest activity in over two years, which means Chinese companies are being careful because of the trade issues with the US.
A Pause in Tariffs, But Uncertainty Remains
The US has paused some tariff increases for 90 days, but this hasn’t calmed investors much. The future of copper prices is still unclear because of the ongoing trade talks and investigations.
DISTORTED PICTURE
It’s worth noting that global exchange copper inventory hasn’t changed much this year, with stocks hovering around the 500,000-ton level, down just 1,700 tons from the start of January.
But there has been a wholesale redistribution of physical metal from the rest of the world to the U.S.
This process is still playing out and will likely continue doing so until the Trump administration decides on whether to impose a copper import tariff and at what level.
The CME-LME arbitrage should in theory stabilize at the announced tariff rate, but quite evidently that’s not going to happen overnight given the rising volume of inventory weighing on the U.S. component of the trade.
And the longer it takes for the White House to make up its mind, the higher the U.S. copper mountain is going to grow.
The opinions expressed here are those of the author, a columnist for Reuters.
