Copper price collapses by 20% as US excludes refined metal from tariffs

[Ben Graham]

Copper prices collapsed by 20% on Wednesday afternoon after US President Donald Trump excluded the most widely imported form of copper from his planned import tariffs.

In its statement, the White House confirmed that the 50% import tariff will only apply to semi-finished products such as copper pipes, wires, rods, sheets and tubes, and to copper-intensive goods like pipe fittings, cables, connectors and electrical components.

Copper futures collapsed following the tariff announcement.

The most actively traded COMEX copper futures fell by 19.6% to $4.5235/lb. as of 4:15 p.m. ET, the lowest since early May, following the announcement.

Prior to that, US copper prices had been trading as high as 28% above the benchmark futures in London, as traders anticipated the tariff would be applied to all refined metal imports.

The decision is the latest surprise from Trump to upend the copper market. When the US president first launched a probe into copper tariffs earlier this year, US copper prices skyrocketed relative to the rest of the world and set off a race to ship the metal into US borders to beat the tariffs.

Then earlier this month, he triggered another surge in the US copper market with an announcement that the tariff would be 50% — twice what most market participants had been expecting — which sent prices to a new all-time high.

Analysts say the move to exclude refined copper — known as cathodes — from the tariffs is likely to further roil global trade flows of the metal. The massive volumes of copper that have been shipped to the US in recent months created a huge stockpile that now may be re-exported.

“If cathode is excluded, the arb is over,” said Michael Haigh, head of FIC and Commodity Research at Societe Generale. The market “should approach parity again.”

Codelco sees ‘good news’ in exclusion of cathodes from US copper tariffs

The move to differentiate between refined metal and semi-processed products in the tariff policy follows lobbying from the copper industry, with some key players arguing that the US did not have sufficient capacity to replace all of its copper imports immediately.

The copper levies will also not stack on top of separate charges on automobile imports, which Trump put in place earlier this year, according to the White House.

(With files from Bloomberg)