Copper prices surged by more than 10% yesterday, Tuesday, after it was announced that US President Trump could soon implement 50% tariffs on copper imports into the US. This statement led to a buying frenzy in the US and global supply concerns.
Just minutes after the announcement, the price of the red metal exploded, surging by 11% to an interim high of $5.896 per pound. Currently, a pound of copper is already back at around $5.70, after a slight initial decline was observed.
High Price Premium on US Copper
Analysts at TD Securities see this price development as a “liquidity event” similar to what was observed with gold earlier this year. As the experts further explain, the 50% tariff planned by Trump would lead to a significant price premium for US copper. Compared to prices on the London Metals Exchange (LME), this amounts to approximately $2,000 per ton, currency-adjusted.
This would lead to as much copper as possible being stored in US warehouses, which in turn would strain global supply, according to TDS. At the same time, many analysts are convinced that copper demand will significantly increase due to the AI revolution and the global energy transition – keywords: data centers, energy infrastructure.
However, the TDS experts also point out that high copper prices are not set in stone, as it will be difficult for the US government to maintain such a high tariff. Ultimately, high copper prices in the US would be a disadvantage for the country’s competitiveness and would make American products even more expensive.
Copper: High Prices could Lead to Even Higher Prices
According to a report by Kitco News, copper production in the US covers approximately 64% of domestic demand. To fully cover this, imports of around 700,000 tons of the red metal would be necessary.
However, TD Securities considers a significant correction in copper prices unlikely, as the US is ultimately responsible for “only” 8% of global demand. The experts pointed out that the LME, in order to expand its copper inventories, would have to close the price gap with the US, meaning higher prices could lead to even higher prices.
Direct Impacts of the Trump Decision
The introduction of a 50% tariff on copper will ultimately have an impact on copper prices at the LME and in Shanghai, but according to analysts at CG Capital Markets, companies with copper mines in the US are primarily affected. According to the experts, these include Freeport-McMoRan (NYSE FCX) with its operations in Arizona, Grupo México (BMV GMEXICOB) with its ASARCO business unit, and Rio Tinto plc (LON RIO) through the Kennecott mine.
Sooner or later, should copper prices sustainably remain at this high level, the effects of a 50% US tariff are likely to impact the entire copper market, including juniors and explorers.
For example, Australia’s American West Metals (WKN A3DE4Y / ASX AW1) even has a copper project in the US (Utah) with its Copper Warrior property, although the focus is on the Storm copper project in Nunavut, Canada. There, in Nunavut, Sitka Gold (WKN A2JG70 / TSXV SIG) also has a promising copper project with very high grades in surface samples, the exploration of which has just been announced!
Also interesting, in our opinion, is Axo Copper (WKN A416BY / TSXV AXO), which just went public on the Canadian stock exchange via IPO and is using the fresh capital raised to advance the exploration of the high-grade La Huerta project. Tomorrow, Thursday, July 10, a discussion with the CEO will take place, moderated by the well-known expert Florian Grummes!
Also interesting, in our opinion, is Aztec Minerals (WKN A2DRF0 / TSXV AZT) with the Cervantes Project (Sonora, Mexico), a large-scale porphyry gold-copper discovery. Drilling is currently underway there.
