Copper traders are plagued
Usually, prices for security or a trading in fairly narrow bands. Of course, the trend of the prices because information is not universally distributed, and it takes time and confirmation for people to purchase or sell out, but on a daily (or even weekly) basic price ranges and volumes are generally pretty narrow.
A few times every decade you will experience a number of really epic movements or witnesses of very short periods. When you see this, it can be useful to be placed with cash and access to research. I am not sure if the newest ‘epic’ movement turns out to be one of those opportunities, but I do believe that it is worth further attention. And as I said, they only happen a few times in a decade.
The newest edition of an epic move has just taken place in the copper market, where traders have demonstrably chosen the rate correctly but not the product.
Read the White House as follows:
On July 30, 2025, President Donald J. Trump gave one Proclamation According to section 232 of the Trade Expansion Act of 1962, with regard to a “national security threat” set by copper import. Based on a report of 30 June 2025, report from the secretary of the trade, the proclamation finds that the import of buyer in current quantities and circumstances is in danger of hindering US national security by weakening domestic production and increasing dependence on foreign sources.
The most important findings were that the buyer is crucial for defense systems, infrastructure and industrial applications due to conductivity and sustainability. That the American copper production has fallen considerably, with a single abroad that dominates more than 50 percent of global melting and refining. And that unfair foreign commercial practices, global overcapacity and domestic legal burdens have reduced the US competitiveness, resulting in vulnerabilities in supply chains and industrial resilience.
With effect from 1 August 2025, a rate of 50 percent will be imposed on the import of semi-finished copper and intensive copper derivatives products, in addition to existing tasks. A process will be determined within 90 days to identify rates and apply it to extra copper derivatives.
The secretary of the trade will check the import and assess the need for further actions, including a proposed phased rate on refined buyer (15 percent in 2027, 30 percent in 2028).
Domestic sales requirements for copper input material and high-quality copper scrap will be implemented under the Defense Production Act.
The aim of the proclamation is to increase domestic copper production to reduce foreign dependence, to strengthen the supply chains, industrial resilience and the industrial basis of defense and to promote investments, employment and innovation in the American copper sector.
Implications
Until this point, and as Figure 1., physical copper traders revealed huge tonnages copper in the US in the US before the expected rates were imposed by Trump.
Figure 1. World copper inventories of LME, SHFE & COMEX (Cumulative Total)
Source: Macromicro
Figure 1, in Geel, shows the acceleration in the American (Comex) stocks as purchases for expected rates loaded at the front. According to Bloomberg reporters: “For months, traders had fallen above the other to send the buyer to the US to conquer stronger higher prices. They quickly built a stock with a value of more than US $ 5 billion spread over American ports – in particular New Orleans, which has become unlikely to the largest stock market inventory in the world.”
The result of all these purchases was a huge premium in the price of buyer that was traded on Comex/CME compared to the London Metal Exchange price. And that created the most profitable arbitration in the career of many experienced buyers, buy in London and sell it in the US
Trump (always) Chicking Out (Taco), and the proclamation of the White House – that rates are not immediately imposed on refined copper ‘cathodes’ – have put an end to that arbitration, with the premium for our copper that now collapses, as shown in Figure 2.
Figure 2. Premium for American buyer collapses after tariff surprise
Source: LME, CME Group
The collapse of the spread is the result of the collapse of the price of Comex High Grade Copper Futures from approximately US $ 6.00/LB to less than US $ 4.50/LB in two days. The decrease of more than 25 percent has reduced the copper price to levels that were traded four years ago.
In contrast to the prevailing expectations that the new tariff regime would include the entire copper supply chain, refined buyer, cathodes, ores and concentrates were remarkably exempt from the tasks imposed. Trump’s 50 percent rate only applies to semi-finished copper goods, including pipes, pipes, cables and electrical components.
The resulting evaporation of the most important arbitration administration program and the collapsed price means that the US is confronted with an inventory glut of an estimated several hundred thousand tons, which must be liquidated.
In the medium term, the demand is positively influenced by the estimated Chinese consumption that grows eight percent annually thanks to the demand from devices and car manufacturers, and improving the indexes of global purchasing managers who reflect a recovery of industrial demand. On the negative side, American fears may have raised the question, which could weigh the second half of the question of the year.
In the meantime, on the supply side, it is worth noting that Chilean exports, which represent 25 percent of the worldwide delivery, has risen six percent, analysts raise that the export of Peru has fallen four percent and the licensing issues limit Indonesian exports. And worldwide delays in the decision -making of investments have generally hindered the growth in supply.
Longer term, analysts at Barrenjoey, believe that shortages are on the rise and note that the copper market has now passed for 30 months without a large new project commissioned, a trend that could lead to shortages in two to three years.
My recording
Every decade a few market movements are so dramatic that they force you to sit up and take knowledge.
For example, I remember during the COVID-19 Lockdown period, when futures of crude oil traded at negative prices (Figure 3.). Friends then called me and asked what they should do if something should do. I answered quite a pinch, “empty your swimming pool and fill it with gasoline!” By that I meant that they ‘should support the truck’ because prices for oil would not remain negative for a long time. Two years later the prices peaked, which have risen six times.
Figure 3. West Texas Intermediate crude oil future prices 2020 ($/barrel)
Works: here
The world is not shrinking. The current world population of eight billion people is expected to grow by 25 percent to 10 billion people in three decades. Historically, these predictions have almost always been exceeded.
Nobody suggests that you are buying and keeping copper putures for thirty years, but you may not have to do that. The demand for all metals will rise in the coming decades – including copper and investors, only the current extremely negative story and sentiment need to marginally shift from where it seems to be. The tantrum of the Koperen Prize today has the characteristics to be temporary.
Of course there is no price floor and the price can fall further, but a demonstrably more relevant question, if you believe that the demand for the buyer will grow in the coming years, the return will produce an investment in copper in the next three, five or ten years.
Roger Montgomery is the founder and chairman of Montgomery Investment Management. Roger has more than three decades of experience in fund management and related activities, including stock analysis, stock and derivative strategy, trade and effects. Prior to the establishment of Montgomery, Roger positions in Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also the author of the best -selling investment guide for the stock market, value. Aabel-Hoe to appreciate the best shares and buy them for less than they are worth.
Roger regularly appears on television and radio, and in the press, including ABC Radio and TV, the Australian and Ausbiz. View upcoming media performances.
This message was contributed by a representative of Montgomery Investment Management PTY Limited (AFL No. 354564). The main purpose of this message is to provide factual information and not to provide financial product advice. Moreover, the information provided is not intended to give a recommendation or opinion about a financial product. However, each comments and opinion of opinion can only contain general advice that has been drawn up without taking into account your personal objectives, financial circumstances or needs. Therefore, before acting on the basis of one of the information provided, you must consider the suitability in the light of your personal objectives, financial circumstances and needs and you must consider requesting independent advice from a financial adviser if necessary before you make decisions. This message excludes specific personal advice.
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