00:00Copper prices have swung wildly in recent weeks, driven by shifting signals from U.S. President Donald Trump.
00:07Prices started to soar in early July. This is after Trump pledged a 50% tariff on copper imports,
00:16eventually hitting a record high of nearly $13 a kilogram as traders rushed to stockpile.
00:21But then last week, markets were caught off guard when Trump clarified that the levy would apply only to semi-finished products,
00:30such as pipes, cables, wires. Copper prices tumbled more than 20% on the news, the steepest drop in decades.
00:38Copper is essential in a wide range of industries, from cars and smartphones to power grids and computing.
00:44Top producers include Chile, Peru and the Democratic Republic of Congo, followed by China and the United States.
00:52Now, Anika Gupta is Director of Macroeconomic Research and Investment at investment company Wisdom Tree.
00:58Joining us now, Anika, thanks so much for your time.
01:01Am I right that really what Trump has done is bring copper in line with aluminium and steel?
01:07Well, yes, in a way, we have seen a complete reversal of that premium that COMEX copper had over the copper price traded on the LME exchange.
01:20We've seen that arbitrage opportunity almost evaporate over the last week since we saw that announcement being made.
01:29And it really is reflecting the change after this, you know, initial assessment that the U.S. has made on the critical use of copper.
01:39So it is it it does have widespread economic impacts because, you know, we're looking at that new 50 percent and duty applying to about 10 to 12 percent of the total U.S. copper use.
01:52But one half of all which accounts for one half of all semi-finished copper imports.
01:59What is Trump's thinking behind targeting copper, along with with with steel and aluminium?
02:04Is it all about making America great again?
02:08Yes, it is very much about bringing production back home, especially for a number of the, you know, sourcing of copper.
02:17And it's also trying to ensure that more companies locally are sourcing their supplies from domestic producers.
02:27So that is the long term, you know, intent that Trump has behind behind this reassessment that he's made from the initial announcement on July 8th to now the change in announcement, you know, at the end of the month in July.
02:43And that's what it really is trying to reflect.
02:46Do you think that there's some wiggle room here?
02:49We've seen that the United Kingdom was able to negotiate 10 percent tariff on steel while everyone else is facing a 50 percent.
02:58China still has until August the 12th to finalize its big trade deal, possibly longer.
03:03China is a big copper producer.
03:05Do you think that there might be some room for negotiation around copper?
03:08I think there is definitely room for negotiation.
03:13And that's primarily because of China's leveraging power when it comes to rare earth elements, you know, with China's dominance in the rare earth market.
03:22You know, it is able to actually leverage its position as it holds nearly 90 percent of refining capability worldwide.
03:31And that does give it leverage in trying to negotiate with President Trump on, you know, a better resolution on the tariff front.
03:40Where do you see the price of copper going sort of medium to long term?
03:44I mean, it took a shock dip last week because everyone was expecting all copper, even raw copper, to be tariffed.
03:51But long term, copper is so crucially important for a lot of the new tech.
03:56Do you see that it will eventually recover and grow again?
04:02Well, you know, short term, I would say that arbitrage opportunity has now evaporated.
04:08Now that we're seeing, you know, COMEX copper come back down after we've seen a lot of stockpiling take place in COMEX inventories.
04:17So over the short term, we're likely to see that impact come down.
04:21The big, you know, forward looking demand feature that everyone's anticipating is further stimulus in China helping to, you know, push demand higher for copper and in lockstep raise copper prices.
04:36So looking ahead, I think investors are looking forward to the long term copper story, which is telling us that, you know, copper's, it's unique physical properties alongside its criticality in not only decarbonization, but also in its use in the technology and arms and ammunition will be quite important.
05:02And hence, that long term driver is definitely intact when it comes to copper's usage.
05:07Well, thank you so much for your insights today, Anika.
05:10Anika Gupta is the macroeconomic research director at investment company Wisdom Tree.
