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America is experiencing a surge in metal prices as traders rush to stock up on copper, aluminium, and steel in anticipation of President Donald Trump’s proposed tariffs.
Trump recently announced plans to impose a 25% tariff on steel and aluminium imports, with the possibility of adding levies on imported copper as well.
This looming threat of tariffs has created a significant price gap between the US and Europe, with US prices soaring above their European counterparts. The premium for New York Comex copper futures has reached over $800 per tonne higher than the London price, marking the widest disparity in years. Comex copper prices have surged to over $10,000 per tonne.
The inflated US premiums are a result of market distortion, driven by concerns of a potential supply shortage rather than increased demand, according to analyst Tom Price from Panmure Liberum.
Meanwhile, concerns over tariffs have sent shockwaves through the American aluminium market, causing the Midwest premium to skyrocket. This premium, which tracks the price difference between US and London aluminium, rose sharply following Trump’s tariff announcement.
Despite some short-term buffers in US aluminium stocks, JPMorgan warns that if tariffs are imposed on all countries, the premium could rise even further as inventories deplete rapidly.
As details of the tariffs are expected to be revealed soon, many traders are hesitant to take positions until the policies are clarified, creating uncertainty and volatility in the market.
Both copper and aluminium are essential materials used in various industries, from electronics to automotive and aerospace sectors.
Traders are racing to secure physical metals ahead of potential tariffs, driving up premiums for steel and precious metals like silver and gold in the US market.
The proposed tariffs are likely to have a significant impact on Canadian aluminium producers, who supply a substantial portion of US aluminium needs.