FX.co ★ Copper Holds Recent Underperformance

Copper futures in the U.S. fell below $4.6 per pound, maintaining the decline observed last week and lagging behind other base metals. This drop came as an abundant supply of physical copper in the U.S. led to the elimination of the metal's premium in the North American market. In addition, South America's significant ore production prompted the International Copper Study Group to revise its surplus forecast for this year to nearly 300,000 tonnes. Consequently, the increased risk of a surplus caused foreign traders to close their long positions on U.S. copper futures, positions predominantly acquired following the announcement by the Trump administration of a probe into tariffs on copper imports. This was paired with a marked rise in U.S. copper inventories, as metal was re-imported to American factories to mitigate potential levy risks, thereby narrowing the price gap between U.S. and London copper futures. Although the White House has recently embarked on trade deal negotiations with major partners, the Department of Commerce's inquiry into imposing copper tariffs continues.