Informist, Wednesday, Jul. 9, 2025

By Ashutosh Pati

MUMBAI – Even though prices of copper surged in the US after President Donald Trump on Tuesday announced plans to impose a 50% tariff on copper imports, prices fell on the London Metal Exchange and the Multi Commodity Exchange of India. Analysts expect copper prices to tread lower in the short term as the tariffs could dampen demand and lead to ample supply outside the US. Commerce Secretary Howard Lutnick said that tariffs on the red metal are likely to be put in place by the end of this month or Aug. 1, as per media reports.

While the tariff announcement was not a surprise to market participants, the quantum of the levy caught them off guard. In February, Trump had ordered the Commerce Department to investigate the threat copper imports pose to national security and suggest ways to mitigate it. The mitigation efforts include "potential tariffs, export controls, or incentives to increase domestic production", according to the order.

"This would be the first time copper has faced import duties in the US. While the move doesn't come as a surprise, the size of the levy is surprising. The market had expected a tariff of up to 25%," analysts at ING said in a report.

Since February, traders and companies globally have been moving the red metal to the US to avoid the imminent tariffs, reducing inventories elsewhere. This is likely to continue till the tariffs are implemented. "Copper (price) in the US is now up more than 40% this year, with prices continuing to benefit from the front-running of tariffs," ING analysts said.

However, the wave of copper rushing to the US is likely to stop once the tariffs come into effect, and subsequently more supply of the metal will be available in other markets, which could push prices lower. "In the short term, copper is likely to trade downwards to $9,400 (per tonne) on the LME and around INR 865-INR 860 (per kg) on the MCX," said Manoj Jain, director of Prithvi Finmart.

"There is now more copper stored in COMEX warehouses than there is in the LME and Shanghai Futures Exchange warehouses combined. This will likely improve the availability of copper, ex-US, which would weigh on LME copper prices. This will likely only play out once tariffs are implemented," ING analysts said.

At 1532 IST, the most-active July copper contract on the MCX was 0.9% lower at INR 882.50 per kg, and the three-month copper contract on the LME was at $9,587.5, down 2% from the previous close.

Ajay Kedia, director at Kedia Advisory, sees support for July copper contracts on the MCX at INR 878-INR 880 per kg, and the three-month contract on the LME at $9,540 per tonne. The resistance is INR 906 per kg on MCX and $10,200 per tonne on LME, he said.

Kedia added that though prices are likely to fall after the announcement of the tariffs, they will recover in the medium term as trade tensions have eased comparatively. End

US$1 = INR 85.67

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Tanima Banerjee

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