Copper now costs way more in the U.S. than elsewhere. This could hit its economy hard
...
As U.S. prices remain elevated despite larger-than-usual inventories, the gap in U.S. Comex futures
over those on the LME has fluctuated between $500 and $1,500 since Trump announced a probe into copper in February. Historically, that rate has been near-zero, and was around the $150 level in 2024.
Prices on the Shanghai Metals Market, meanwhile, have been similar to those on the LME.
On Tuesday, the Comex-LME price premium soared by 138%, moving above $2,600 a tonne, according to London-based agency Benchmark Mineral Intelligence.
...
This huge discrepancy will start to have a major economic impact, Daan de Jonge, Benchmark’s lead analyst for copper demand and prices, told CNBC.
“On household spending, if you’re buying a new fridge, air conditioner, car, everything is going to get more expensive, and companies could reasonably be expected to pass that on,” he said. Depending on the final baseline tariff rates, U.S. consumers could opt to buy goods produced more cheaply abroad due to that impact.
“If we’re looking at public investment, U.S. debt has got more expensive, the dollar is declining, and now you’re getting a major raw material cost increase for infrastructure investments ... I’d expect that to start showing employment effects.”
Another side effect may be that projects start to swap copper for cheaper aluminum, which in some cases can be used as a replacement, though it is heavier and more expensive to maintain in the long run, de Jonge said.
...
“There’s a reality that has to be dealt with, and the price of copper with a 50% tariff is not going to mean copper production in the U.S. goes through the roof tomorrow.”
Chase said U.S. consumers and businesses will feel an immediate impact, and it will likely hit the U.S.’s AI infrastructure build-out plans.
Analysts at Citi, meanwhile, called Tuesday a “watershed moment for the copper market in 2025.”
“Imminent flagged tariff implementation should abruptly close the window for further significant U.S.-bound copper shipments (possibly for the rest of 2025),” they said in a Wednesday note, saying this would cause a pullback in ex-U.S. pricing.
...
Reply With Quote
