Global production guidelines beg for clarity about Donald Trump’s rate policy before a 50 percent levy is imposed on the import of copper, because their stocks decrease and the clock is ticking on existing contracts.
The American president has sworn to impose the higher rate on the metal from 1 August, when fitting together levels on all imports of steel and aluminum. But it remains unclear whether the levy will be applied to all copper products, causing fear in industry.
The in -depth concern of companies about copper come because they are already struggling with the higher costs of the escalating trade war of Trump, with the American sale of products from cars and trucks to construction equipment affected by policy uncertainty.
Analysts warn the consequences for prices and the demand for permanently higher copper rates will be serious because the metal is widely used in electric vehicles, chips and defense equipment, as well as household appliances and wiring.
The US is highly dependent on the input of the metal, which, according to Morgan Stanley, represented around 53 percent of its copy question in 2024.
John O’Leary, North -American boss of Daimler Truck, said that companies had become more and more frustrated because they had now expected clarity about the rate policy. The group reported a decrease of 20 percent this week in the sale of trucks in the second quarter in North America, since logistics companies knew purchases due to the uncertainty.
“It is clear that no rates are the best, but if something comes, just tell us what it is and we can continue with life and start finding out how to deal with it,” said O’Leary.
So far, O’Leary said, the company had reduced the company to suppliers who invoked the rates as force majeure in an attempt to increase prices for long -term purchase agreements about aluminum and steel.
“The contracts that we have protected so far, but certainly at some point they start to get up and then negotiate again.”
The White House has not released any details of the rates, including whether they apply to semi-finished copper products such as threads and bars, and whether restrictions on the export of copper scrap can also be entered.
In addition to long -term contracts, there has been a stream of copper in the US this year about expectations of higher rates. As a result, analysts say that End users of Copper are probably not affected with the full impact until the producers’ own warehouses no longer have stocks.
“I would say that there are six to nine months to use that buffer that was built by extra buying from refined copper, and then you could see the full price of the 50 percent rate,” said Amy GoWer, raw material stratist at Morgan Stanley.
Although pre-buying means that American industrial companies have healthy stocks of the metal for the time being, they must ultimately “take the prices to compensate for the higher copper costs, which can lead to destruction on the road,” said Jake Seltz, a portfolio manager at Allsspring Global Investments.
Companies and investors are still hopeful that the Trump administration will settle for lower copper rates. The arbitration between American prices and elsewhere is only about 28 percent, which suggests that the market does not fully believe that the rates of 50 percent come into effect.
“My best gamble is that the realization of the impact of a 50 percent rate on copper will hopefully be understood before it is actually felt,” said James Cordier, Chief Executive and head trader with alternative options for investment group in Florida.
Barclays estimated that a rate of 50 percent to $ 110 could yield for the costs of a gasoline vehicle and no less than $ 700 for an electric car, because the metal is used in cable trees and batteries, engines and inverters.
However, the impact will probably indirectly by filtering car manufacturers, because they are suppliers who often buy the metal. Trump has also promised that the car industry, which is confronted with a rate of 25 percent on the import of foreign vehicles, will not be stacked with extra levies on the metals.
During a pre-earing briefing with analysts on Wednesday, the BMW of Germany described the impact of higher copper rates as “negligible”, according to Bernstein.
Aerospace Industries Association, an American trade group, has estimated that it can take up to 10 years to find, certify and switch a new supplier of critical minerals because of the complex nature of the space and defense chains.
“In the short term, we encourage the administration to maintain access with trusted sources of these minerals to prevent a price peak that will be felt the most by our small and medium-sized suppliers,” said Dak Hardwick, vice-president of international matters.
How copper prices will be trend in the medium term is also unclear. Analysts expect the global price to fall on the London Metal Exchange as soon as the arbitration transactions have performed their courses. If prices remain high, users can switch to alternative materials such as aluminum, which would reduce copper prices, according to SMBC Nikko.
For some, the copper rates offer a chance. Cable maker Prysmian, the largest company buyer of copper outside China, said that it saw the rates as “positive” for the company, even while it waited more details about which products the taxes apply.
The Milan-listed company already makes the majority of its American products in the US purchasing buyer from Freeport McMoran and of recycled scrap material. Then it makes the wire and cable on its own facilities in the US.
“We are much less exposed than the country and the rest of the sector to import,” said Maria Cristina BiFulco, head of investor relationships at Prysmian, and notes that it only imports about a third of American needs.
However, copper prices are passed directly to customers, based on benchmark prices, and BIFULCO acknowledged that higher copper prices could reach the demand.
“In our case we will continue to the customers’ raw material prices. So the real impact of the rate is not on us, it is on the final customers. The trends in the raw material price tend to influence demand behavior.”
Additional reporting by Sylvia Pfeifer in London, Harry Dempsey in Tokyo and Martha Muir in New York
