Copper Stocks Hammered As White House Tariff Doubts Rattle Metals Trade

Copper future and related stocks plunged on Thursday morning after a Reuters report said that the White House's "copper tariff plan stalls amid affordability concerns." 

The Trump administration has yet to decide whether to impose tariffs on refined copper, sending copper prices around the world to record highs this summer as physical copper flooded US warehouses. 

The report from the outlet:

The White House has not yet made a decision on refined copper tariffs as officials juggle concerns that higher prices for the red metal could raise manufacturing costs against ‌the potential benefits of encouraging more domestic mining, according to two people familiar with the matter.

The hesitation comes as the administration is increasingly focused on affordability ahead of November's midterm elections, with President Donald Trump and Republican lawmakers facing pressure to demonstrate that their economic policies are lowering — rather than raising — costs for American consumers and businesses.

The report is unwinding the tariff trade risk premium, with US copper prices sinking 4.6%. 

Freeport-McMoRan fell 8%, Southern Copper dropped 7% and Teck Resources slid 7.9%. Ero Copper declined 8.6%, Capstone Copper lost 8.2% and First Quantum Minerals retreated 6.4%.

"Today's news should further close the CME-LME arbitrage which has previously benefited companies that sell US copper, including Freeport (~1/3 US copper sales), and is also negative for the LME copper price," Crittenden wrote in a note to clients. 

Goldman commodity specialist James McGeoch told clients:

China has the Rare Earth, increasingly US has the Copper. The affordability issue is subjective. Inflation driven majority by Energy not metals (See Hot China CPI/PPI this week was majority energy). Onshoring manufacturing requires reliable supply chains. Cost inflation has driven  incentive prices higher and a big chunk of the copper move is mine supply issues, scrap tightness. Look at the supply story - Ali at $3,300, Zinc at $4k, all supply stories, Copper is the same.. We all watch Copper TC's, take a look at Zinc and LEad, also at unprecedented record highs. This is a Supply story.

Think about it like this....If you're worried about US manufacturing, US steel prices run at 2.5x Asian prices. Copper trades at a more modest 10-15% premium......Copper is an issue for the build out of electrification. The administration clearly cares about

First impulse is to sell US leaders like FCX.US, SCCO.US have multiple asks on buying the dip here in AAL.LN and GLEN.LN . GLEN is a Copper stock with an energy put and a marketing tailwind (and Zinc and all the others, dont forget freight!). ... Commodity desk mostly seen buying vol, 18v on Monday, to 20v (Tue ATH) to bid on 22v just now....I DO NOT PERSONALLY BELIEVE ANYTHING HAS CHANGED AND I AM NOT ADJUSTING MY POSITIONS. I AM LONG. We know there is accumulated length, we also know this mkt loves to utterly punish anyone that shows the slightest sign of weakness/nervousness.

Three charts...Copper arb (in below1st arb approx $150 live or like 1% implied, has halved this am), Physical inventory positions, and investor (Managed money) positions.

As of 10 a.m. ET, Goldman's US Metals basket was down nearly 3%. The copper tariffs report spread weakness into the broader metals trade.