Copper prices slip on tariff threat and Chinese inventories

24/02/2025 01:37 AST

Explosions blast rock mass at BHP Billiton's Escondida, the world's biggest copper mine, in Antofagasta, Chile.. Photos by Reuters file

Copper prices slipped on Monday as traders focused on U.S. President Donald Trump's tariff threats and changing demand signals from inventories in top consumer China.

Benchmark copper on the London Metal Exchange (LME) was down 0.8% at $9,483 a metric ton at 1723 GMT. It had gained 8% since the start of the month on hopes of stronger demand from China after its Lunar New Year holiday.

Trump has said he is planning to impose tariffs on aluminum and copper - metals needed to produce U.S. military hardware - to entice producers to make them in the United States.

"Tariffs pose a headwind to growth and demand," said Bank of America analyst Michael Widmer, "The last time Trump introduced tariffs in 2018, many investors rightly concluded that shorting base metals was a very attractive trade."

Meanwhile, copper stocks in warehouses monitored by the Shanghai Futures Exchange have climbed above 260,000 tons, having stood at about 83,000 tons at the start of the year.

In Shanghai's bonded warehouses, copper inventories have more than doubled to 33,000 tons since mid-January.

Also weighing on copper was data from the International Copper Study Group (ICSG) showing the market had a 301,000 ton surplus last year, compared with a 52,000 ton shortfall in 2023.

Meanwhile, stocks of copper in LME-approved warehouses have risen 12% to 267,225 tons since February 12.

However, cancellations - metal earmarked for delivery - at 84,400 tons suggest that large amounts of copper are likely to leave LME warehouses over coming days and weeks.

Traders expect much of this copper to end up in COMEX warehouses in the United States, where prices have soared relative to the LME on nervousness about tariffs on copper imports.

In other metals, aluminium was down 1.1% at $2,655 a ton, zinc fell 2.7% to $2,848, lead retreated 12% to $1,985, tin slipped 1.6% to $33,150 and nickel ceded 0.4% to $15,455.

Reuters