Commodity: copper

Copper is the third most consumed metal in the world. It is also known as a highly conductive material. The properties of copper include good electrical conductivity, excellent thermal conductivity, corrosion resistance, high ductility, recyclability, and non-magnetic properties. The copper market is segmented by end consumer industries (automotive and heavy equipment, construction, electrical and electronics, industrial and other end consumer industries). Recently, the development of electric vehicles has increased the demand for copper. The leaves, stator, rotor, shaft end, hollow wire and motor used in electric vehicles are composed of heavy copper. Major copper producing countries include Chile, Peru and China. Chile produces more than a quarter of the world's copper, and is by far the country with the largest copper reserves. Escondida, located in the Atacama Desert in Northern Chile and owned by mining company BHP, is the largest copper mine in the world by total copper reserves, production capacity and actual copper output.

Under pressure from a surprising US tariff exemption, copper futures were trading below $4.40 per pound on Friday and were headed for a weekly decline of about 24%. In order to protect important inputs like ore, cathodes, and concentrates—the most frequently imported types of copper—President Donald Trump declared that the recently implemented copper tariffs would only be applied to semi-finished goods like wires and pipes. In the past, traders had inflated domestic premiums by rushing shipments into the US in order to frontload anticipated duties. Those premiums are winding down rapidly now that the exemption is in effect. Analysts also cautioned that the US might have an excess of copper, which might be reexported and put additional pressure on world prices.

The Copper's market is trying simultaneously to price in both the broader tariff threat to global manufacturing activity and the specific threat of U.S. tariffs on copper imports. Copper's initial reaction to Trump's tariffs tells you how negative the market thinks the potential hit to manufacturing activity and copper demand will be. Analysts have moved quickly to downgrade their price forecasts on concerns about the dampening effect on global economic growth.