Tariffs on Watch
Copper prices are down sharply on Monday as traders look ahead to Wednesday’s US tariff announcement. The pause on Trump’s ‘Liberation Day’ tariffs is due to end and tariffs are set to return to higher levels across the board with new rates taking effect from August 1st. Hopes of a US/China trade deal have been left unfulfilled for now and with global trade expected to deteriorate as a result of the return to higher tariff levels, the copper demand outlook is weakening accordingly. In particular, Trump’s threat of an additional 10% tariff on BRICs countries (mix of heavy copper importers and producers) is particularly bearish for the metal.
Copper Down Heavily
The futures market gapped lower at the weekly open and has continued lower through early European trading on Monday with prices now down more than 4% from last week’s highs. Copper prices had been doing well over recent weeks, bolstered by higher demand in the US ahead of expected copper tariffs. Imports to the US has caused a run on global inventories with copper stockpiles on the LME falling far below seasonal averages.
Market Impact
However, with reciprocal tariffs now back in focus, expectations of copper-specific tariffs have been side-lined for now. If fresh tariffs are announced on Wednesday and particularly if Trump does push ahead with higher tariffs on BRICs countries, this should be firmly bearish for copper prices near-term. However, if any last minute deals or extensions are granted, or if the extra BRICs tariffs are avoided, copper should see some relief buying kick in.
Technical Views
Copper
The rally in copper has stalled for now into the 5.1985 level with price pulling back sharply. Momentum studies are weakening here suggesting room for a deeper pullback. 4.8010 will be the key pivot for bulls to defend in order to keep the upside bias alive and prevent a deeper drop towards 4.5785 next.
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