Informist, Wednesday, Mar. 26, 2025

By Ashutosh Pati

MUMBAI – Copper contracts on the London Metal Exchange rose to a nine-month high and surpassed the psychologically significant level of $10,000 per tonne Tuesday. Analysts expect prices of the red metal could soon breach the all-time highs on the London Metal Exchange and the Multi Commodity Exchange of India, driven by global supply tightness and firm demand from China.

US President Donald Trump's probe into copper imports has prompted companies in the US to rush and secure copper, leaving the rest of the world short on the red metal. Moreover, the rally was exacerbated after Bloomberg reported that Glencore has temporarily suspended copper shipments from its Altonorte smelter after an issue affecting the plant's furnace.

"I think Chinese demand and the (US) tariffs have definitely supported the prices. And, I cannot rule out further upside," Sriram Iyer, senior research analyst at Reliance Securities, said. "At least $300-$400 upside is possible from here. It could also breach the all-time high," Iyer said.

Ajay Kedia, director of Kedia Advisory expects copper prices to touch INR 970 per kg on the Multi Commodity Exchange of India within a month. The red metal hit an all-time high of INR 945.90 per kg on MCX on May 21, 2024, and $10,935 per tonne on the LME on May 20, 2024.

At 1444 IST, the most active April copper contract on the MCX was down 0.6% at INR 911.35 per kg. On the LME, the three-month copper contract was at $9,944.0 per tonne, down 1.7% from the previous close. So far in the current year, copper prices have risen around 10% on the LME and around 14% on the MCX.

Meanwhile, the US tariffs on copper imports could be announced within several weeks, way ahead of the previous deadline, according to a Bloomberg report. Trump last month ordered the US Commerce Department to investigate the threat that copper imports pose to national security and suggest ways to mitigate any such threat. The mitigation efforts include "potential tariffs, export controls, or incentives to increase domestic production," the order said.

"Major metals trader Mercuria warned that there is 500,000 tonnes of copper heading to the US. This compares with normal imports of around 70,000 tonnes per month. The shift in inventory (to the US) could leave the rest of the global market tight in the face of stronger demand in China," Daniel Hynes, senior commodity strategist at ANZ Research, said in a note.

Copper contracts on the COMEX rose to a record high of $5.2255 a pound Tuesday and the arbitrage between COMEX and LME reached all-time highs of over $1,400 per tonne. "This creates incentives for traders to shift metal to the US to front-run any potential tariffs. There's a further upside risk for copper prices in New York if tariffs are implemented," analysts at ING Economics said in a note.

The global refined copper market was in a deficit of 19,000 tonnes in January, according to the International Copper Study Group. Copper inventories at warehouses registered with the LME have fallen over 18% to 216,750 tonnes over the past four weeks, further supporting prices.

Meanwhile, Trump said Monday that he might soften the reciprocal tariffs he plans to impose on trading partners next month and that some nations might get exemptions. "That could limit the economic damage and therefore impact on copper demand," Hynes said. End

US$1 = INR 85.71

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Saji George Titus

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