U.S. President Donald Trump signed an executive order on 10 February announcing a 25% tariff on all steel and aluminium imports into the United States with“no exceptions or exemptions”. After the news，the premium for US COMEX copper futures over London’s LME copper futures soared to a record high of $920 a tonne, well above Friday’s $558, amid panic sentiment.
Analysts at Benchmark Minerals Intelligence said in a report that premium between COMEX and LME has reflected expectations that Trump will impose a 10.5 per cent tariff on copper.
Earlier on this year’s Vancouver Resource Investment Conference (VRIC), experts were optimistic about the long-term outlook for copper due to the fact that the grades at large copper mines are getting lower, and that the copper market will become increasingly tight due to the lack of alternative mines coming online. At the same time, demand for copper is still growing.
Lobo Tiggre, CEO of IndependentSpeculator.com, emphasises that global demand for copper will rise with or without factors such as the energy transition, artificial intelligence (AI) and electric vehicles (EVs), and that demand from developing countries alone is high enough.
Rick Rule, founder of Rule Investment Media, pointed out that the copper bull market from 2000 to 2010 was due in large part to China’s urbanisation.
Ivan Bebek, president and CEO of Coppernico Metals, agrees that global population growth and urbanisation are driving long-term growth in demand for copper. In the early 1980s, the global population was around 4 billion; now it’s closer to 8 billion. Everywhere you look, houses built during the baby boom of the last century are being torn down and replaced by condos.
Rick Rule says it can take 25 years or more for a new copper project to go from discovery to production. And the world’s major copper mines are now facing declining grades and depleting copper reserves. While some jurisdictions have more friendly policies, building a copper mine is no easy task. It requires significant capital and risk. Copper market fundamentals are supporting a long-term upward price trend.
John Jacobs, a key minerals expert at the Bipartisan Policy Center argues that tariffs on allies will make Chinese imports more competitive.
In an interview with MINING.COM, Jacobs discussed Trump’s proposal to impose 25 per cent tariffs on Canadian goods and 10 per cent tariffs on key minerals.
He noted that even if these key minerals are mined in the U.S., many of them still have to be shipped to China for processing. It would be difficult to ensure that these supply chains are secure if they pass through Chinese processing supply chains and are then imported into the U.S. Jacobs added that if additional tariffs were imposed on imports from U.S. allies, this would only make Chinese imports more competitive by comparison.
