Copper prices are stable at $5.50 per pound. They have increased by 10% since Monday but are down from a high of $5.70 earlier this week. Concerns about potential supply disruptions due to upcoming US trade tariffs are helping keep prices steady. A 50% tariff on copper imports will start on August 1. This move aims to strengthen the US copper industry and decrease reliance on imports. Following this announcement, US copper futures reached a record 25% premium over London Metal Exchange (LME) prices, as traders rushed to stock up before the tariff takes effect. However, this could lead to domestic shortages later this quarter as supplies run low. The US imports almost half of its copper, mostly from Chile, but has limited domestic refining capacity. Building new refineries can take years, which might raise costs and delay projects in construction and electronics. Copper is trading within a long-term upward trend with strong support. The Relative Strength Index (RSI) shows heightened activity, indicating a bullish outlook. Key support levels are at $5.03, $4.62, and $4.29. As the tariff deadline approaches, expect increased market volatility. Buyers should be cautious, as trading copper carries significant risks. Currently, copper is holding around $5.50 after rising earlier in the week. Prices have eased from a high of $5.70, suggesting the initial buying surge has stabilized, although the overall upward trend is still in place. Recent trading activity has been driven by the anticipated 50% tariff starting August 1. This policy aims to boost domestic production but may cause short-term availability issues. US traders have already increased their purchases significantly, creating a gap between domestic futures and global prices. This gap is now an unprecedented 25%, as traders scramble to secure inventory before the new costs kick in. While this strategy may work in the short term, it could lead to challenges if supplies dwindle faster than expected, pushing prices higher, especially if new supplies are slow to reach the market. Close to 50% of US copper consumption comes from imports, mainly from Latin America. The limited refining infrastructure in the US is a significant weakness in the supply chain. New facilities will take years to become operational, making it unrealistic to find immediate alternatives. This situation puts pressure on domestic supplies, especially in high-demand sectors like semiconductors and renewables. Technical indicators still suggest a strong trend. The RSI remains high without signs of divergence, and the long-term upward channel offers a clear path as long as current support levels hold. If momentum fades, price levels around $5.03, $4.62, and $4.29 could become significant. As the policy deadline looms, more price fluctuations are likely. Traders might be tempted to take advantage of brief price shifts, but heavy bets in one direction could backfire if volatility spikes. With premiums increasing and inventory conditions changing, it’s wise to maintain flexible positions and tight liquidity. Stay aware of key expiry dates, keep options coverage active, and consider rolling exposure instead of doubling down. The tariff effectively boosts immediate demand while putting pressure on future supply. This is likely to create more aggressive movements in futures prices, especially in calendar spreads, which could widen as we get closer to August. Pay attention to warehouse drawdowns and export data from Chile, as any disruptions there could lead to further price increases. The challenge lies in how quickly downstream users adapt. If consumption remains high—or worsens—we could see continued scarcity, reflected in both prices and volatility. We are closely monitoring these developments, and keeping our strategies flexible while staggering orders may be the best approach in this tightening market.

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