Copper futures rose past the $5 per pound threshold on Thursday, testing the highest in three months as the risk of tariffs on the material by US President Trump drove traders to move metal between exchanges and trigger supply squeezes in key storage centers.
The US President maintained the probe against copper imports to prelude eventual tariffs, pressuring the outlook of domestic supply due to the limited smelting and processing capacity. Consequently, traders moved copper out of LME houses and triggered an aggressive backwardation in the futures curve, driving on-warrant inventory to plunge 80% this year tom/next spreads to $40 per tonne. In the meantime, softer concerns of reciprocal tariffs by the US, lower geopolitical tension in the Middle East, expectations of stimulus by the Chinese government and monetary easing by the Federal Reserve all contributed to a softer dollar and an improved outlook for global manufacturing demand.
