Background on Donald Trump and His Tariff Announcements
Donald Trump, the President of the United States, has been actively involved in international trade negotiations. Recently, he announced an extension of a 50% tariff on imports from the European Union (EU) until July 9th, reversing an earlier threat to impose the tariffs starting June 1st. This decision came after discussions with EU leaders, including Commission President Ursula von der Leyen, who stated that more time was needed to reach a favorable agreement.
Impact on Copper Prices
The copper price in London reached its highest point in a month at the beginning of the week following Trump’s announcement. Copper futures in London climbed 1.12%, trading at $9,622.10 per metric tonne—the highest since April 2nd when it was valued at $9,694.45 per tonne.
Annually, copper has seen a 9.74% increase. The most actively traded copper contract on the Shanghai Futures Exchange also rose by 0.73%, reaching 78,400 yuan ($10,929.88 per tonne).
Analysts from CiBanco explained that neither party wants to break negotiations definitively, as it would be detrimental to both interdependent economies. However, market uncertainty remains high as the 90-day pause on tariff news has not quelled expectations.
Supply and Demand Factors
Hexun Futures broker noted that the current scarcity of copper supply could push short-term metal prices upward. Meanwhile, copper inventories at Shanghai Futures Exchange warehouses fell 9% to 98,671 tonnes last week.
Despite this, Everbright Futures broker stated that tariff-related uncertainty may still limit copper price behavior.
Performance of Other Metals
- Aluminum increased by 0.41% to $2,466 per tonne.
- Zinc rose by 0.56% to $2,712 per tonne.
- Lead went up by 1.22% to $1,994 per tonne.
- Nickel advanced by 0.9% to $15,570 per tonne.
- Tin climbed nearly 0.89% to $32,665.
On the Shanghai Futures Exchange, aluminum improved by 0.15% to 20,195 yuan per tonne; lead grew by 0.36% to 16,835 yuan; zinc dropped by 0.49% to 22,190 yuan; nickel fell by 0.2% to 122,640 yuan.
Decrease in Gold Demand
Gold prices fell on Monday following Trump’s reversal of the tariff threat against EU products, reducing demand for gold as a safe-haven asset.
Spot gold decreased by 0.8% to $1,329.78 per ounce, while U.S. gold futures dropped by 0.45% to $1,355.1.
According to UBS analyst Giovanni Staunovo, the price decline can be attributed to Trump’s decision to postpone higher tariffs on the EU. He also mentioned that trading activity might be subdued leading up to the U.S. Memorial Day.
Key Questions and Answers
- Q: Who is Donald Trump, and why is his tariff decision relevant? A: Donald Trump is the President of the United States. His decision to extend tariff deadlines on EU imports impacts global trade negotiations and, consequently, commodity prices like copper.
- Q: How did copper prices react to Trump’s tariff extension? A: Copper prices in London and Shanghai both increased following the tariff extension announcement.
- Q: What factors contribute to the current copper price surge? A: Scarce copper supply and reduced EU-US trade tensions have driven up copper prices.
- Q: How did other metals perform alongside copper? A: Most metals, including aluminum, zinc, lead, nickel, and tin, experienced price increases on both the London and Shanghai exchanges.
- Q: Why did gold prices fall despite market uncertainty? A: Gold prices fell because Trump’s tariff reversal reduced demand for gold as a safe-haven asset during times of trade tension.
