There’s More to the Copper Story than Tariffs: | Australian Markets

Last week, copper futures on the New York COMEX exchange swelled 11%.

So, you’d anticipate copper miners to comply with, proper?

In some cases, they’ve accomplished okay…

A copper developer in the portfolio for my paid readership group was up over 10% final week, which aligns with the broader transfer in the futures market.

But one of our producers was down 4%.

Meanwhile, copper miners broadly, tracked by the Copper Miners ETF [ASX: WIRE], had been down round 1.3% final week.

Broadly talking, it means copper stocks aren’t taking part in ball with the futures market.

So, ought to buyers be involved?

Mining Memo’s Take

There’s no denying it: tariffs are having a direct impression on copper costs.

Evidence started earlier this yr, when copper futures surged to close to all-time highs during the first spherical of Trump’s tariff jingle.

And that’s taking place again after Trump imposed a 50% tariff hike on copper imports final week.

So, will this price surge be short-term? Or is there one thing more ‘fundamental’ underpinning copper costs?

To reply that, it’s important to perceive that copper costs are tracked on completely different markets (or exchanges).

By taking a look at markets that aren’t impacted (as a lot) by tariffs, we are able to reveal whether or not that is the solely story underpinning copper.

First up, the New York COMEX.

This is the benchmark exchange for copper trading and is what most news shops use to quote copper costs.

However, given its location in the US, it’s additionally the exchange most impacted by Trump’s tariff agenda.

As merchants ‘front-run’ tariff deadlines, copper imports into the US surge.

That pushes up the native price of copper in contrast to different important markets, corresponding to these in London or Shanghai.

To show you what I imply…

Year-to-date, copper futures on the COMEX are up 38%, as proven in purple under. Meanwhile, the London Metal Exchange (LME), proven as pink, is simply up 10%:

But as you possibly can see under, it was solely since the situation of tariffs started to emerge (late final yr) that the two exchanges started to diverge:

So, what’s the key takeaway right here?

Copper miners seem to be more aligned with what’s taking place on the LME, an exchange that’s much less impacted by the ‘tariff effect.’

Should Investors be bracing for copper falls as soon as tariff deadlines hit?

This is the all-important query!

Once tariffs come into place, merchants will stop front-running imports of copper.

That will sluggish purchases and, of course, stress native costs on the COMEX exchange.

However, whereas it has underperformed, copper’s price motion on the LME stays bullish.

Today, LME copper costs are trading just under $10,000 per tonne.

Copper on the LME reached simply over $9,800, round the ranges from the peak of the final mining cycle, in 2011.

Given that the price motion continues to be sturdy on the LME, I believe there’s more to the copper story than tariffs.

Fundamental drivers that might drive copper costs larger past the ‘Trump tariff effect.’

I’ve delved into these many occasions at Mining Memo:

Falling head grades at the world’s largest copper mines, particularly in Chile.

As effectively as falling manufacturing amongst the world’s largest copper mines due to strikes, drought, and mine nationalisation, forcing mine closures.

But a lack of investment in new provide, in issues like exploration and new mine development might be going to be the most important issue.

So, whether or not you’re taking a look at the COMEX, the LME, or copper producers immediately…

The price motion stays bullish. And that helps the basic view, too.

Until subsequent time.

Regards,

James Cooper,
Editor, Mining: Phase One and Diggers and Drillers

All advice is basic advice and has not taken under consideration your personal circumstances.

Please search unbiased financial advice concerning your own state of affairs, or if doubtful about the suitability of an investment.