Copper futures reached a new all-time high in New York on Wednesday after news surfaced that President Donald Trump is contemplating imposing tariffs on the metal sooner than expected, within weeks rather than months.
The prices of futures on New York's Comex rose above $5.35 per pound, and the price gap between the US and London expanded. The looming threat of tariffs has triggered a surge in shipments to the US.
Hedgeye Risk Management energy analyst Fernando Valle expressed optimism about copper, believing it will mimic the trend seen in steel due to the effect of tariffs.
The White House initiated an examination in February into US vulnerabilities concerning copper imports, indicating a potential imposition of tariffs on the metal.
A Bloomberg report revealed that tariffs on copper imports might be implemented in the upcoming weeks, which is faster than the market's previous anticipation of September to November for implementation.
Goldman Sach's Eoin Dinsmore noted that if tariffs are put in place in May, shipments to the US are likely to be expedited.
Copper futures in New York have surged by nearly 30% year-to-date, partially attributed to China's economic incentives and Europe's plans for increased defense spending. The metal, considered a barometer of growth trends, is utilized in various sectors such as electronics, plumbing, construction, and defense.
Analysts foresee Europe and China providing extensive stimulus, with China being a major copper consumer. This positive outlook remains despite the impact tariffs may have.
The rise in copper prices is also influenced by elevated artificial intelligence spending by tech giants, boosting demand for the metal. Nonetheless, concerns remain over the potential effects of a full-scale trade war on demand.
Market analyst Nikos Tzabouras cautioned that escalating trade tensions pose a risk to the global economy and could weaken copper consumption, leading to price declines.
Ines Ferre is a senior business reporter at Yahoo Finance, providing coverage of the latest financial and business news and events impacting stock prices.