U.S. copper futures widened their premium to the London benchmark on Wednesday, reflecting U.S. President Donald Trump’s plan to impose a 50% import tariff on the metal.

“I believe the tariff on copper, we’re going to make 50%,” Trump told reporters at a White House cabinet meeting on Tuesday, with U.S. Commerce Secretary Howard Lutnick later saying the tariff is likely to be in place by August 1 or even earlier.

The most active COMEX copper futures contract’s premium to the London Metal Exchange three-month contract that serves as the global benchmark (LMECMXCUc3) jumped to 27% on Wednesday, up from 13% before Trump’s announcement.

“This is a watershed moment for the copper market in 2025 as the imminent flagged tariff implementation should abruptly close the window for further significant U.S.-bound copper shipments,” Citi analysts said in a note.

LME copper HG1! fell 1.6% to $9,635 a metric ton in official open-outcry trading after touching $9,553.5 for its lowest since June 13. COMEX copper (HGc3) hit a record high on Tuesday but was last down 2.1% at $5.568 per pound.

The COMEX-LME arbitrage remained below the planned 50% rate as the market awaited more clarity on what copper products and suppliers the import tariff would affect.

“As with previous tariffs, this higher initial tariff rate could be used as a negotiating anchor, followed by concessions or exemptions,” Goldman Sachs said.

The biggest copper suppliers to the U.S. – including Chile and Canada – could eventually secure a lower 25% rate, Citi said.

Massive copper inflows to the U.S. since Washington started its investigation into potential tariffs in mid-February have also limited the immediate effect of the tariff plan for U.S. copper consumers that include the construction, electronics and transportation sectors.

Traders have shipped copper from warehouses around the world to the U.S. over the past five months, raising COMEX inventories (HG-STX-COMEX) to a seven-year high.

“The U.S. market is awash with copper, which will now need to find a buyer again,” said Julius Baer analyst Carsten Menke.

These expectations and daily LME data showing an inflow of 4,625 tons to copper stocks in LME-registered warehouses eased the accumulated tightness in the LME system.

The spread between the LME’s cash copper contract over three-month copper one was last at a discount of $2 a ton, compared with a premium of $51 on Tuesday and a $320 premium – the highest since November 2021 – less than two weeks ago.

In other metals, LME aluminium ALI1! fell 0.3% to $2,579.50 a ton in official activity, zinc ZNC1! rose 0.2% to $2,726.50, lead LEAD1! lost 0.9% to $2,038 and tin FTIN1! slipped 0.6% to $33,205 while nickel NICKEL1! shed 0.3% to $15,000.
Source: Reuters