Copper Prices Reach Multi-Month Highs Amid Market Optimism and Tariffs

Copper price surges to multi-month highs amid anticipated U.S. tariffs and improving demand from China, coupled with a potential ceasefire in Ukraine. Key insights include significant inventory depletions in the U.S. and increased production in China.

On Wednesday, copper prices reached multi-month highs as traders anticipated potential U.S. tariffs. Investor optimism was buoyed by improving demand signals from China and the potential for a ceasefire in Ukraine. The three-month copper price on the London Metal Exchange (LME) rose by 1.1% to $9,769 per ton, marking its strongest position since November 5, while U.S. Comex copper futures increased by 1.9% to $4.86 per pound, the highest level since May 29 of the previous year.

The imposition of 25% tariffs on steel and aluminum products in the U.S. coincided with President Donald Trump initiating a probe into possible new copper tariffs. This development has encouraged U.S. traders to increase stockpiling. Ole Hansen, head of commodity strategy at Saxo Bank, noted, “There’s a lot of copper being shipped to the U.S., depleting the inventory levels elsewhere and underpinning prices outside of the U.S.” Hansen also commented on the improved market sentiment, attributing it to both the ceasefire discussions and recent positive developments in U.S.-Canada relations.

European stock markets responded positively when Ukraine accepted a U.S. ceasefire proposal. Furthermore, Trump refrained from doubling metals tariffs after Ontario, Canada, halted plans to impose surcharges on electricity exports to the U.S. Concurrently in China, copper prices on the Shanghai Futures Exchange saw a 2.08% increase, influenced by enhanced demand prospects; earlier, prices had reached highs not seen since September 30.

The economic indicators indicate a strengthening demand, especially in sectors such as grid infrastructure and electric vehicles. According to analysts from ANZ, “Manufacturers, supported by recent stimulus measures, are ramping up production… copper cathode inventories in Shanghai and Guangdong extended declines from a peak due to fewer imports in recent months.”

Among other metals, zinc emerged as the leading performer on the LME, reversing previous losses with a 1.5% gain to $2,956 per ton after Nyrstar announced a 25% production reduction at its Hobart zinc operations in Australia. Additionally, prices for LME aluminum rose 0.6% to $2,719.50 per ton, nickel increased by 1.4% to $16,720, lead climbed 1% to $2,071.50, and tin added 0.9% to reach $33,450.

In conclusion, copper prices continue to rise due to expectations of U.S. tariffs and encouraging signs of demand from China. Investor confidence has been further enhanced by geopolitical developments, particularly regarding the Ukraine ceasefire. The copper market is bolstered by reduced inventories and positive growth in related manufacturing sectors, indicating a changing landscape for industrial metals.

Original Source: www.tradingview.com