Copper prices have plummeted after new tariffs were imposed on certain copper products. Prices dropped $1.22, or 21.89%, marking one of the worst days since 2015.<\/p>\n
President Trump’s new 50% tariffs target semi-finished copper products and derivatives. These tariffs will be effective from August 1, 2025. However, refined copper, ores, concentrates, mattes, and scrap copper are excluded from these tariffs.<\/p>\n
The targeted items include pipes, wires, rods, sheets, and copper-intensive derivatives like pipe fittings and electrical components. The tariffs are designed to strengthen the domestic copper industry by mandating the sale of US-produced copper scrap within the country.<\/p>\n
Refined copper’s exclusion from tariffs has led to a sharp decline in US copper futures. This move surprised markets, which expected tariffs on a broader range of products. There are discussions for future tariffs on refined copper of 15% by 2027 and 30% by 2028. <\/p>\n
Copper trading fell below the key moving averages, with support lying between $3.92 and $4.02. A further drop could indicate more bearishness in the market. This unexpected exclusion of refined copper from tariffs has altered trade predictions and influenced copper prices worldwide.<\/p>\n
With copper prices falling over 21% today, we see that the market was completely wrong-footed by the decision to exclude refined copper from the new 50% tariffs. Implied volatility on copper options has spiked dramatically, with data showing a jump to over 45% for front-month contracts, a level not seen since the market shocks of 2022. This high volatility presents an opportunity for those prepared for continued price swings in the coming weeks.<\/p>\n
The new rules, effective tomorrow, will likely cause a surge in US imports of refined copper cathodes, as manufacturers rush to avoid the hefty tariffs on finished pipes and wires. We are anticipating a glut of raw copper to build within US warehouses, which should keep downward pressure on COMEX futures prices. June 2025 import data from the Commerce Department had already shown a 12% year-over-year increase in refined copper imports, a trend we now expect to accelerate sharply.<\/p>\n
For futures traders, the path of least resistance is now lower, with the price having decisively broken the 200-day moving average at $4.63. We are viewing any rally back toward that level as a prime opportunity to initiate new short positions. The next major downside target is the critical support zone between $3.92 and $4.02, a level that has held up the market multiple times since 2024.<\/p>\n
Given the high cost of options right now, buying puts outright is expensive. We believe a more prudent strategy is to sell out-of-the-money call spreads to collect the rich premium, positioning for the price to stay below the $4.50-$4.60 range through August and September. This is a bearish play that benefits from both price stagnation and a gradual decline in volatility.<\/p>\n
A more complex strategy involves a spread trade, going long on refined copper futures while shorting the equities of US copper fabricators. These manufacturers, who turn refined copper into finished goods, are now facing severely compressed profit margins. We’ve already seen stocks like Encore Wire (WIRE) plummet more than 25% on this news, and we expect this underperformance to continue.<\/p>\n","protected":false},"excerpt":{"rendered":"
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