BMO Equity Research IN Tune Copper Tariff Surprise
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Jul 9, 2025 Helen Amos, a macro commodity analyst, and Matt Murphy, a base metals equity analyst, delve into the potential impact of a 50% U.S. tariff on copper. They discuss how this could affect global pricing dynamics and supply chains, with Helen predicting shifts in the COMEX-LME spread. Matt highlights which U.S. miners might benefit from a refining growth and the challenges of U.S. smelting capacity. The conversation also touches on the slow pace of building refining infrastructure and the implications for both domestic and international markets.
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Tariff Shock Widens US Price Spread
- A surprise 50% US tariff on copper pushed COMEX prices sharply higher and widened the COMEX–LME spread significantly.
- Markets now expect the spread to move toward the tariff level over weeks to months, though timing and scope are uncertain.
LME Faces Selling But Has Limited Downside
- Expect downward pressure on LME prices as traders arbitrage by buying COMEX and selling LME while inventories outside the US rebuild.
- Global inventories remain low and Chinese demand plus supply lag should limit LME downside over time.
Warehouse Flows Can Temper Price Spikes
- Inventory movements into CME warehouses can temporarily push prices down as traders lock in new arbitrages.
- Short-term profit-taking and position adjustments add to volatility while market participants await tariff details.