Background on Donald Trump and His Relevance
Donald Trump, the President of the United States, has recently made headlines due to his shifting stance on acquiring Greenland and imposing tariffs on countries opposing the U.S. takeover of the Arctic island. His decision to abandon both plans has had a notable impact on global markets, including the copper market.
Copper Market Reaction
On Thursday, copper hit its lowest level in nearly two weeks as markets calmed following Trump’s assurance that he would not use military force to claim Greenland and his reversal on imposing tariffs on European allies who resisted the U.S. takeover.
At 10:34 GMT, the benchmark copper contract on the London Metal Exchange (LME) fell by 1.3%, trading at $12,640 per tonne—its lowest since January 9. The contract had earlier dropped to $12,621 per tonne during the session, marking its lowest point since then.
Just a week prior, the copper contract reached an all-time high of $13,407 per tonne.
Analyst Perspectives
Tom Price, an analyst at Panmure Liberum, explained the market’s reaction: “Anxiety has decreased in the market, and everything is retreating because the main driver is no longer a concern.”
As investors start withdrawing funds from their cautious positions, it is expected that the prices of commodities will be affected in the coming days.
Price further noted that this year’s rise in industrial metals, including copper, “really has nothing to do with specific supply and demand aspects” as there have been no significant changes in those areas.
Copper Market Dynamics
The LME cash copper contract traded at a discount of 84 USD per tonne compared to the three-month contract, after previously reaching a premium of over 100 USD on Tuesday. This indicates minimal short-term need for the metal.
LME copper inventories have risen to 168,250 tonnes, their highest level since May 2019, following the arrival of 8,725 tonnes in U.S. warehouses. However, these levels pale compared to the over 500,000 tonnes of copper stored in Comex warehouses.
Other Base Metals Performance
- Aluminum: Up by 0.1% at $3,116.5 per tonne
- Zinc: Up by 0.7% at $3,197 per tonne
- Lead: Up by 0.1% at $2,023 per tonne
- Nickel: Up by 0.2% at $18,030 per tonne
- Tin: Down by 0.7% at $51,055 per tonne
Key Questions and Answers
- What caused the drop in copper prices? The decline in copper prices was primarily due to President Donald Trump’s decision to abandon plans to acquire Greenland and impose tariffs on European allies who opposed the U.S. takeover of the Arctic island.
- How have other base metals performed? Among the base metals, aluminum increased by 0.1%, zinc rose by 0.7%, lead went up by 0.1%, nickel improved by 0.2%, and tin decreased by 0.7%.
- What do analysts say about the copper market? Analyst Tom Price from Panmure Liberum stated that the market’s anxiety has decreased, leading to a retreat in commodity prices as the main concern is no longer present.
