Copper Falls As Tariff Decision Looms
Tariff Decision on Watch
Copper prices remain under pressure today, despite the weakness we’re seeing in USD, as traders await a key decision on tariffs. The US government is due to make a determination on whether import tariffs on certain metals will be extended to include refined copper. Refined copper has so far been excluded from the restrictions but could potentially be included this time around when the US Commerce Department makes it’s ruling this month. Last year, copper prices soared ahead of expected tariffs on LME copper before Trump made a U-turn last minute and excluded refined copper products, leading to the seismic shift lower we saw late summer. A record surge in US inventory build-up ahead of those expected tariffs led to a dramatic supply shortage globally from which the market still hasn’t rebalanced.
Longer-Term Outlook
Fresh supply issues recently have contributed to renewed strength in copper prices and the fear now is that if the US does include copper products under import restrictions, prices will soar once again. If copper is excluded once again, however, the current sell off should deepen. However, with broader supply issues still in play, the longer-term outlook remains bullish, particularly while the US/Iran war continues and global distribution through the Strait of Hormuz remains compromised.
Technical Views
Copper
The rally in copper has stalled for now into the retest of the 6.7190 highs with price now reversing heavily lower. 6.2845 will be the next support zone to watch, with the bull trend line from YTD lows coming in around that level also. Bulls need to defend this zone to prevent a deeper drop towards 6.1090 next.
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