The long-awaited clarification of US Copper tariffs has arrived. Once again, it turned out not to be as bad as feared, Commerzbank's commodity analyst Barbara Lambrecht notes.

Copper price at Comex plummets

"Only the import of semi-finished Copper products such as pipes, sheets, and rods will be subject to a 50% tariff starting August 1, but not the import of refined Copper like cathodes and anodes. This was a big surprise: the Copper price at Comex plunged by 20%, and the premium in New York compared to LME, which was recently at 30%, collapsed. The Copper price at LME barely reacted."

"There might be some support in the medium term at best: firstly, Americans will continue to buy 'normally' on the world market. However, in anticipation of possible tariffs, they had well-stocked their Copper reserves, so short-term purchases, even without the tariff, may be somewhat lower than usual. Secondly, no additional material will now be forced onto the market outside the US, as it would not have been possible to sell it in the US in case of high tariffs."

"And a third factor to mention: Increasingly more domestically produced semi-finished Copper products are to be sold within the country due to the tariff. The aim is to boost US production in Copper smelters. However, the tariffs could also slow down US Copper production if domestic production were significantly more expensive than that of usual suppliers which would significantly dampen demand."