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Traders in the US are paying much higher prices for copper, aluminium and steel than their European counterparts as they rush to buy the metals ahead of President Donald Trump’s tariffs.
On Sunday, Trump said he would impose 25 per cent tariffs on all steel and aluminium imports. He has also threatened to apply levies on imported copper.
The looming tariffs have created an unusually wide transatlantic price gap, with the premium for benchmark New York Comex copper futures widening to more than $800 per tonne over the London price, the highest level since at least early 2020. Comex copper on Monday was up 2 per cent at just over $10,000 a tonne.
The high US premiums reflect a “distorted” market, said Tom Price, an analyst at Panmure Liberum, reflecting fears about a “starvation of supply” rather than the more usual reason of increased demand.
“The US can’t switch to any other source in the short term,” he said, so buyers there are “competing with each other to get hold of the metal”.
Higher US premiums are a reflection of “the expectation that prices will be higher in future as a result of tariffs”, said Daria Efanova, head of research at Sucden Financial. “Markets are pricing that before it actually hits.”
Trump was expected to give more details about the prospective tariffs later on Monday, potentially including whether there might be any exemptions, as were granted when he levied tariffs on metal in his first term as president.
After his previous U-turns on tariffs against Canada and Mexico, analysts say many traders are waiting for more clarity, with some avoiding taking positions until the policies become clearer.
“The uncertainty creates a skittishness,” said Al Munro, an analyst at Marex. “It creates a lack of investment. You just sit there and you don’t do anything.”
Copper is widely used in electrical equipment such as wiring and motors, while aluminium is a lightweight material used in an array of industries including the automotive and aerospace sectors.
Copper is taken into Comex warehouses on a so-called “duty paid” basis, meaning that all taxes must be paid before the metal enters the facilities. That means supplies taken in before tariffs come into effect would not be affected by the levies.
Comex’s stocks of copper jumped last year and have edged up further this year. “People are looking to protect against having to pay copper price plus tariff,” said William Adams, head of base metals research at Fastmarkets.
Prices for steel and precious metals such as silver and gold have also risen to hefty premiums in the US, as traders rush to secure access to physical metals ahead of any potential tariffs coming in.
The potential tariffs on steel and aluminium are likely to have a particularly big impact on Canadian aluminium smelters, which supply about 44 per cent of US aluminium needs.
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