Copper: Tariff risks keep prices vulnerable – ING
ING’s Commodities Strategist Ewa Manthey notes that Copper has dropped sharply after a Reuters report suggested a US decision on refined Copper tariffs is still pending, highlighting how a tariff premium has driven prices beyond fundamentals.
ING's Commodities Strategist Ewa Manthey highlights how the sharp drop in copper prices due to uncertainty surrounding US decisions on refined copper tariffs. The tariff premium has pushed copper prices above their intrinsic value, leaving the near-term outlook vulnerable to tariff news. Copper tumbled over 3% on Thursday, falling below its record high of $14,875/t on the London Metal Exchange.
The market had previously assumed tariffs would proceed, but this news has diminished the tariff premium. If the tariff premium between New York and London shrinks, shipping metal to the US becomes less appealing, potentially allowing some stocks to return to international markets. Nonetheless, refined copper production has increased by 2.4% in the first half, resulting in a preliminary surplus of about 131,000 tonnes.
The market will eventually see the arbitrage close, with tariffs being ruled out leading to a narrowing of the US premium and metal returning to international markets. Should tariffs be implemented, imports may rise temporarily before the duties take effect but should eventually slow down.
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