FX.co ★ Copper Hovers Close to Record High

Copper futures in the United States stood at $5.5 per pound on Friday, slightly retreating from the record $5.7 per pound reached on Tuesday. Nevertheless, prices remained 10% above Monday's closing figure, as markets evaluated the potential impact of a 50% tariff on copper supplies. President Trump has imposed this tariff with the goal of consolidating the domestic copper industry and reducing reliance on imports of refined products. The tariff is set to be enforced starting August 1st, despite the fact that increasing production capacity takes several years to achieve. This development led to the premium between U.S. copper and comparable futures on the London Metal Exchange (LME) reaching a record high of 25%, as international benchmarks declined. This phenomenon reflects the depletion of growing domestic stockpiles, as traders began moving copper into the United States since the initial tariff threats on base metals in February. If the tariff is implemented, it could severely disrupt domestic supply, given that the U.S. imports nearly half of its copper consumption, primarily from Chile. Additionally, the country's refining and smelting capacities could be strained, as there are only two active smelters currently operating in the U.S.