- Copper prices have reached all-time peaks in New York due to concerns over tariffs and increasing demand.
- A banking specialist from Bank of America stated that the copper market is facing a supply crisis.
- Increasing expenditures on defense and the growth in electric vehicle manufacturing are poised to affect both the demand for and supply of copper.
This year, gold has been hitting record levels above $3,000 per ounce — however, it isn’t the sole commodity experiencing strong interest.
Copper is utilized in products ranging from computers to electrical cables, and traders have been purchasing it aggressively amidst the threat of trade tariffs being imposed.
Demand has remained notably robust in New York, with copper reaching a peak on Wednesday of up to $5.374 per pound — exceeding $11,840 per metric ton.
This surpasses the $5.20 per pound recorded last May and represents almost a 30% increase from the beginning of the year.
Nevertheless, copper prices on the London Metal Exchange fell on Wednesday to a low of $9,893 per ton.
These identical tariff concerns have similarly driven up gold prices significantly. higher in New York Rather than in London this year, there has been a surge in transporting gold bullion across the Atlantic to capitalize on the discrepancy.
Supply crisis
Michael Widmer, who leads metals research at Bank of America, informed Business Insider about a similar accumulation of stocks occurring in the U.S., which has sparked a supply crisis involving copper.
Widmer stated that market participants are currently attempting to secure copper units for shipment to the US in preparation for potential tariffs.
There aren't any additional copper units accessible in the current marketplace. More investments must be made in supply; otherwise, I believe we'll face a situation where demand exceeds supply due to insufficient availability.
President Donald Trump's tariffs on imported copper could be implemented much earlier than anticipated, according to a report from Bloomberg on Wednesday.
Howard Lutnick, who served as the Commerce Secretary, was granted up to 270 days To file a report assessing if copper imports posed a threat to U.S. national security. The presidential directive stated that copper is essential for the nation’s economic stability and industrial toughness due to its “critical function in defense systems, infrastructure development, and innovative technology sectors.”
A lot of people anticipate that Trump will unveil new tariffs as early as the upcoming week.
This month, analysts from Goldman Sachs stated their expectation that a minimum tariff of 25% would be applied to imported copper as well as numerous other types of metal.
In a recent note from last weekend, they stayed "strategically hesitant" regarding the metal, stating further: "A concentration on China or an aggressive stance on reciprocal tariffs would likely have adverse effects on copper prices."
Rising defense budgets
Plans by European countries to boost their defense budgets due to uncertainties regarding the US dedication to NATO may also influence copper supplies and pricing.
In February, UK Prime Minister Keir Starmer announced that Britain would increase its defense budget to 2.3% of GDP. 2.5% by 2027 Last week, Germany's legislative body approved a measure allowing for unprecedented expenditures on both defense and infrastructure projects.
Widmer stated that by 2030, we could reasonably argue for a twofold increase in copper consumption by the defense sector, starting from 2009.
Constructing electric vehicles and data centers were additionally intensive uses of copper. "As a result, we continuously increase the demand side," he stated.
Goldman predicts a worldwide shortage of copper amounting to 180,000 tons for this year because of reasons such as increased electrification and diminishing output from mining operations.
According to the International Copper Association, global demand is anticipated to increase by an annual rate of 1.85%, climbing from 28.3 million tons in 2020 to approximately 40.9 million tons by 2040.
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