Copper prices soared to a near six-month peak on Tuesday, fueled by speculative buying tied to potential U.S. tariffs and a weaker dollar, with traders capitalizing on widening arbitrage opportunities between global markets.
Key Developments:
Dollar Softens: A weaker dollar (.DXY), driven by falling U.S. consumer confidence, amplified gains for dollar-priced commodities.
Market Drivers:
Trump’s Tariff Probe: Speculation over U.S. import tariffs to revive domestic copper production has ignited bullish bets, despite concerns about artificial demand.
Arbitrage Frenzy: Traders are shifting copper stocks to the U.S. to exploit the Comex premium, though LME data (cash/3-month spread at a $10/ton discount) shows no immediate physical shortage.
Shanghai Demand Hopes: Chinese copper prices flipped to a slight backwardation, signaling expectations of stronger demand in the world’s top consumer.
Expert Insight:
Ole Hansen, Saxo Bank: “This isn’t end-user demand—it’s a technical reshuffling of stocks. The market is trapped between tariff fears and speculative flows.”
What’s Next?
Tariff Clarity: Traders await details on Trump’s proposed tariffs (0–25%), which could stabilize or disrupt the arbitrage trade.
Global Supply Balance: Sustained stock shifts to the U.S. risk tightening availability in other regions, though no shortages are evident yet.