Surprise US copper tariff tests the mettle of China’s vast refining industry
Although Trump’s tariffs might cause the flow of refined copper to be redirected from the US to other regions, that doesn’t mean the supply is flowing to China
Shockwaves from Washington’s decision to impose a 50 per cent tariff on copper imports are still rippling across the Pacific, and China, the world’s largest consumer of the metal, is feeling the effects.
Copper futures traded in the US rallied on the tariff threat, expanding a price gap with the London and China markets, where prices fell.
While the price differential will encourage arbitrage trading, the tariffs are expected to be implemented sooner than most potential copper deliveries can reach the US, cautioned Zhao Yongcheng, principal analyst of China’s copper market at Benchmark Mineral Intelligence.
“There could be a downward risk for the London Metal Exchange and Shanghai Futures Exchange copper prices, as the physical absorption effect from the US market weakens due to the time constraint,” he said.
The exact timeline and details on whether there will be any exemptions for the metal – most of which the US imports as refined copper from Chile and Canada – are still unclear.