Bloomberg News | March 19, 2025 |
Stock image.
Expectations that the US will add copper to the list of metals subjected to tariffs have send its price near record highs. The key industrial metal crossed the $5-a-pound mark for the first time in months, suggesting that supply concerns will outweigh headwinds from disruptions to the global economy.
Copper’s rise is being driven “solely by supply concerns surrounding the potential for universal tariffs to be placed on all imports of copper into the US,” said Natalie Scott-Gray, a senior metals demand analyst at StoneX, on Tuesday.
Copper price nears record high.
The US is “heavily reliant on foreign copper, with imports accounting for [around] 45% of demand,” she added.
Record shipments
The US is about to be flooded with a massive wave of copper as a worldwide dash to front-run potential tariffs by US President Donald Trump comes to a head.
Between 100,000 and 150,000 metric tons of refined copper is expected to arrive in the US in the coming weeks, according to four people surveyed by Bloomberg with direct knowledge of some of the shipments. If the full volume arrives within the same month, it would surpass the all-time record of 136,951 tons set in January 2022.
Commodities traders including Trafigura Group, Glencore Plc and Gunvor Group are redirecting large volumes of metal earmarked for Asia to the US. The quantity is so big that traders are booking additional warehousing space in New Orleans and Baltimore to accommodate the shipments, some of the people said. The three firms declined to comment.
The surge of foreign copper into the US has widespread ramifications as it drains supplies in other markets including China, the top consuming nation. Copper prices in the US are at levels well above other overseas markets, giving American manufacturers a taste of the kind of cost inflation and supply-chain disruptions that may be triggered by a full-blown trade war.
Trump late last month ordered the US Commerce Department to conduct a probe into possible copper tariffs on national security grounds, in a move that sent copper futures in New York surging above other global price benchmarks.
And while Trump’s earlier musings on such levies sparked concerns on whether traders could get copper into the US before they take effect, a lengthy Commerce investigation opens a longer window to ship the metal.
The differential between prices on New York’s Comex commodities exchange and the London Metal Exchange rose above $1,200 a ton on Wednesday, approaching a record high reached in mid-February. That’s a 12% premium, and it creates a huge incentive for traders and producers to keep moving copper to the US before tariffs are imposed.
Goldman Sachs Group Inc. and Citigroup Inc. anticipate the US will impose 25% import levies on copper by year end. Even with tariffs, American copper buyers have little choice but to keep buying imported metal given that US consumes twice as much as it produces.
The US is “heavily reliant on foreign copper, with imports accounting for [around] 45% of demand,” she added.
Record shipments
The US is about to be flooded with a massive wave of copper as a worldwide dash to front-run potential tariffs by US President Donald Trump comes to a head.
Between 100,000 and 150,000 metric tons of refined copper is expected to arrive in the US in the coming weeks, according to four people surveyed by Bloomberg with direct knowledge of some of the shipments. If the full volume arrives within the same month, it would surpass the all-time record of 136,951 tons set in January 2022.
Commodities traders including Trafigura Group, Glencore Plc and Gunvor Group are redirecting large volumes of metal earmarked for Asia to the US. The quantity is so big that traders are booking additional warehousing space in New Orleans and Baltimore to accommodate the shipments, some of the people said. The three firms declined to comment.
The surge of foreign copper into the US has widespread ramifications as it drains supplies in other markets including China, the top consuming nation. Copper prices in the US are at levels well above other overseas markets, giving American manufacturers a taste of the kind of cost inflation and supply-chain disruptions that may be triggered by a full-blown trade war.
Trump late last month ordered the US Commerce Department to conduct a probe into possible copper tariffs on national security grounds, in a move that sent copper futures in New York surging above other global price benchmarks.
And while Trump’s earlier musings on such levies sparked concerns on whether traders could get copper into the US before they take effect, a lengthy Commerce investigation opens a longer window to ship the metal.
The differential between prices on New York’s Comex commodities exchange and the London Metal Exchange rose above $1,200 a ton on Wednesday, approaching a record high reached in mid-February. That’s a 12% premium, and it creates a huge incentive for traders and producers to keep moving copper to the US before tariffs are imposed.
Goldman Sachs Group Inc. and Citigroup Inc. anticipate the US will impose 25% import levies on copper by year end. Even with tariffs, American copper buyers have little choice but to keep buying imported metal given that US consumes twice as much as it produces.
American buyers are already looking to source more from countries such as Chile and Peru amid a broader buildup of copper stockpiles. Some metal from Mexican and Canadian mines is likely to get diverted to Europe given Trump’s sweeping tariffs on the key US trading partners. Chile’s state-run producer Codelco — already the top shipper to the US — is striving to meet additional demand from its US customers after meeting them last month.
“Everyone sees demand for copper as very strong and they all ask Codelco for more copper,” chairman Maximo Pacheco said in a March 13 interview. That’s partly because “there’s an open discussion about whether copper will have a tariff.”
Potential US tariffs could also upend the copper trading dynamics between Chile and China, which is by far the world’s largest metals consumer. In recent months, more Chilean metal than usual has headed to the US after buyers were caught in a short-squeeze on Comex last year. Tariffs could keep that flow elevated.
That marks a shift for China, which last year bought about 4 million tons of the metal and accounted for about 40% of the world’s refined copper, according to the International Copper Study Group. For the time being at least, the US is usurping China as the preferred sales destination for the world’s top producers and traders, leaving the Asian nation at a disadvantage.
That creates a lucrative environment for producers and traders, allowing them to exploit pricing differences between the US and other markets.
“There’s a broader reshaping of supply chains that is potentially on the cards,” Citigroup analyst Tom Mulqueen said in an interview.
Monthly shipments into Chinese ports for April and May could drop by as much as a third compared to the same period last year, according to one large trader active in the Asian market. Requests to move copper out of London Metal Exchange warehouses in Asia have surged to the highest since August 2017.
Goldman Sachs analysts expect all forms of copper shipped to the US to be hit with tariffs by the end of this year, keeping prices on Comex trading at a hefty premium over other benchmarks. Tariffs could cause China to refine less copper — to the tune of 10,000 to 20,000 tons a month within the first three months. That’s in a global market that Goldman already expected to be facing a 180,000-ton deficit this year.
“The good news is that we see very strong and clear demand,” Codelco’s Pacheco said. “We see this turbulence and uncertainty, but we’ve lived with it many times before.”
(By Julian Luk, James Attwood and Yvonne Yue Li)
Global silver market faces strains as Trump’s tariffs hit
Bloomberg News | March 18, 2025 |
Stock image.
The silver market faces mounting stress as trade-war concerns intensify, with higher rates to borrow metal adding to signs of global dislocation.
A surge in lease rates for the precious metal has become the latest sign of alarm, with anxiety building over the impact of further tariffs from US President Donald Trump. That’s sparked a dash to ship silver into the US in a bid to capture premium prices in New York, possibly causing a squeeze in London.
Precious metals — gold as well as silver — have been upended this year, as Trump challenges the global trade order. That’s spurred demand for havens, and also opened up rare pricing dislocations between key markets. While spot silver has gained about 17% this year — making it one of the best performing commodities — futures in New York have done even better.
On a physical level, the tariff concerns — especially levies against Canada and Mexico, as well as wider reciprocal curbs that may kick in next month — have drawn vast quantities of both gold and silver out of London into US vaults. But given their relative value and density, gold tends to be air-freighted, with silver often taking far longer voyages, typically by ship.
Lease rates — the cost of borrowing metal, generally for a short period — have jumped. One-month rates for silver topped 6% this month after a larger spike in February. That partly reflects concerns about fast-depleting stockpiles in the UK capital, with holdings hitting a record low last month. In addition, not all of what remains is available given it’s tied to exchange-traded products.
“I expect the lease rate in London to remain high for about two to three months,” said Cao Shanshan, an analyst at COFCO Futures Co. With the UK-to-US transfer under way, “silver is a lot bulkier than gold, so the transfer of silver will likely take longer,” she said.
Exchange-reported totals in the US reflect the turmoil. Comex-tallied inventories of silver have expanded to the highest level ever in data going back to 1992 after surging by 40% so far this quarter, a record rise. While New York is still drawing in metal at present, there are also concerns the flows may be thrown into a drawn-out reverse if silver faces a shortage in London vaults.
“Should the long-fabled ‘silver squeeze’ materialize, this slower tradeflow will be a key contributor to prolonging” any potential disruption BMO Capital Markets analyst George Heppel said in a note. That’s because it would take time for silver stockpiles to flow from the US back to London, he said.
The US imports about 70% of its silver from Canada and Mexico, which have borne the brunt of the Trump administration’s moves on trade so far. Ottawa subsequently announced 25% counter tariffs on about C$30 billion ($20.8 billion) of US-made items, including silver. Since then, Trump has reiterated his desire for April 2 to mark a wave of new levies.
“The market may be underpricing the scale and impact of the upcoming April 2 US reciprocal tariffs,” Citigroup Inc. analysts including Max Layton said in a note, highlighting the pricing dislocation. There may be “substantial potential upside should reciprocal tariffs be implemented over the next six months,” they said, adding that silver is unlikely to be exempted from levies.
Spot silver traded a little above $34 an ounce on Tuesday, with Comex futures almost 70 cents higher.
TD Securities also signaled its concern. “If reciprocal tariffs are really like-for-like, you would expect retaliatory tariffs on Canadian silver and that’s about 20% of US imports — so there is a higher risk associated with silver,” said Daniel Ghali, senior commodity strategist at TD. “Even if the disruptions were to completely resolve overnight, we can’t go back to the prior world because you’d never know what will happen the next day.”
(By Sybilla Gross)
Bloomberg News | March 18, 2025 |
Stock image.
The silver market faces mounting stress as trade-war concerns intensify, with higher rates to borrow metal adding to signs of global dislocation.
A surge in lease rates for the precious metal has become the latest sign of alarm, with anxiety building over the impact of further tariffs from US President Donald Trump. That’s sparked a dash to ship silver into the US in a bid to capture premium prices in New York, possibly causing a squeeze in London.
Precious metals — gold as well as silver — have been upended this year, as Trump challenges the global trade order. That’s spurred demand for havens, and also opened up rare pricing dislocations between key markets. While spot silver has gained about 17% this year — making it one of the best performing commodities — futures in New York have done even better.
On a physical level, the tariff concerns — especially levies against Canada and Mexico, as well as wider reciprocal curbs that may kick in next month — have drawn vast quantities of both gold and silver out of London into US vaults. But given their relative value and density, gold tends to be air-freighted, with silver often taking far longer voyages, typically by ship.
Lease rates — the cost of borrowing metal, generally for a short period — have jumped. One-month rates for silver topped 6% this month after a larger spike in February. That partly reflects concerns about fast-depleting stockpiles in the UK capital, with holdings hitting a record low last month. In addition, not all of what remains is available given it’s tied to exchange-traded products.
“I expect the lease rate in London to remain high for about two to three months,” said Cao Shanshan, an analyst at COFCO Futures Co. With the UK-to-US transfer under way, “silver is a lot bulkier than gold, so the transfer of silver will likely take longer,” she said.
Exchange-reported totals in the US reflect the turmoil. Comex-tallied inventories of silver have expanded to the highest level ever in data going back to 1992 after surging by 40% so far this quarter, a record rise. While New York is still drawing in metal at present, there are also concerns the flows may be thrown into a drawn-out reverse if silver faces a shortage in London vaults.
“Should the long-fabled ‘silver squeeze’ materialize, this slower tradeflow will be a key contributor to prolonging” any potential disruption BMO Capital Markets analyst George Heppel said in a note. That’s because it would take time for silver stockpiles to flow from the US back to London, he said.
The US imports about 70% of its silver from Canada and Mexico, which have borne the brunt of the Trump administration’s moves on trade so far. Ottawa subsequently announced 25% counter tariffs on about C$30 billion ($20.8 billion) of US-made items, including silver. Since then, Trump has reiterated his desire for April 2 to mark a wave of new levies.
“The market may be underpricing the scale and impact of the upcoming April 2 US reciprocal tariffs,” Citigroup Inc. analysts including Max Layton said in a note, highlighting the pricing dislocation. There may be “substantial potential upside should reciprocal tariffs be implemented over the next six months,” they said, adding that silver is unlikely to be exempted from levies.
Spot silver traded a little above $34 an ounce on Tuesday, with Comex futures almost 70 cents higher.
TD Securities also signaled its concern. “If reciprocal tariffs are really like-for-like, you would expect retaliatory tariffs on Canadian silver and that’s about 20% of US imports — so there is a higher risk associated with silver,” said Daniel Ghali, senior commodity strategist at TD. “Even if the disruptions were to completely resolve overnight, we can’t go back to the prior world because you’d never know what will happen the next day.”
(By Sybilla Gross)
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