Mining giants Rio Tinto and BHP were among the plays that fell hard in Wednesday's stock market, pulled lower as copper prices plummeted after President Donald Trump signed a proclamation ordering tariffs on copper imports, citing national security concerns. U.S. copper prices continued to slide Thursday.
The White House announced Wednesday they will impose universal 50% tariffs on semifinished copper products and copper-intensive derivative products. These products include copper pipes, wires, rods, sheets, and tubes as well as pipe fittings, cables, connectors and electrical, according to the White House.
However, the Trump administration decided to exclude refined copper from the tariff package. This means the White House is not levying tariffs on ore, cathodes and concentrates which make up a hefty portion of copper imports to the U.S.
The copper tariffs are set to take effect on Friday.
U.S. copper futures sank 20% to around $4.55 per pound, marking the largest intraday fall on record, according Trading Economics. This reversal in copper prices comes after futures booked the best day in history on July 8, according to Dow Jones Market Data, after Trump said he would impose a 50% tariff on imports of the metal. However, earlier announcement appeared to include a tax on refined copper imports.
Copper futures on Thursday continued to fall, dropping 6% to $4.33 per pound.
ING analyst Ewa Manthey late Wednesday wrote that the record intraday decline Wednesday came after U.S. copper prices had been trading at a 28% premium, with the market front-running the expected tariff.
"Trump's first musings of a tariff on copper imports back in January unleased record shipments of the metal to American ports. U.S. refined copper imports increased by almost 130% year-over-year from January to May," Manthey wrote. "There is now an excess inventory in the U.S. and that stockpile might now be re-exported."
"Copper prices should now move beyond the recent focus on U.S. import tariffs that has dominated sentiment for most the year," Manthey added. "Prices have been rising this year largely because the market has been front-running the tariff policy and not because the demand picture has been improving or because the supply has actually been tightening."
Copper Prices: Stock Market Reaction
In Wednesday's stock market, United States Copper Index, an ETF that tracks Comex copper futures, fell around 19.3%. Meanwhile, miners Rio Tinto and BHP declined 4.5% and 3.9%, respectively. Arizona-based copper mining outfit Southern Copper fell 6.3% while Freeport-McMoRan, also based in Arizona and one of the largest copper producers in the world, sank 9.5%.
Brazil-based mining and exploration company Vale edged 2.6% lower in stock market trade.
Southern Copper, based in Phoenix, has mines in Mexico and Peru. It is majority owned as a subsidiary of Grupo Mexico.
In Southern Copper's April earnings call with analysts, CFO Raul Jacob Ruisanchez said if the U.S. were to impose tariffs, the company would "reassign some of the production that we have to some other markets."
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