Analysts say that the unusually high volumes of copper shipments into America is expected to continue as long as price premiums for the red metal keep transactions lucrative for suppliers and traders and the possibility of new tariffs persists.
Earlier in the year, President Trump launched an inquiry into possible new tariffs on imports of copper needed for construction, power grids, and electric cars. Since then, the prices of this metal on COMEX have surged. On March 26th, the metal’s price hit $11,633 per metric ton, resulting in a premium of over $1570 per ton compared to the benchmark contract on the London Metal Exchange.
Data from the American government shows that in March, copper imports exceeded 123,000 tons. This is quite an increase, especially when compared to the 76,000 tons and 58,000 tons imported in January and February, respectively.
While speaking at a Shanghai Metals Market event in Hong Kong earlier this week, UBS Investment Research’s Head of China basic materials Sharon Ding revealed that they expected between quarter of a million to 300,000 tons of more copper to be shipped to the U.S. these next couple of months, amid uncertainties regarding tariffs.
Most of the copper headed to the United States comes from warehouses registered to the London Metal Exchange where the metal’s stocks have declined by almost 60% since February to roughly 170,000 tons.
The premium for the red metal on COMEX has dropped to $600 per ton but still, traders are able to rake in profits by sending the metal to the U.S.
Normally, suppliers and traders with contractual commitments transport copper using container ships as the amounts are fairly small and regular. A container holds about 25 tons of copper. Container ships often stop on their routes to collect cargo, which is why they take about forty days to get to their final destinations.
On the other hand, bulk carriers sail to their final destinations directly, which reduces transit time to roughly 14 days. With traders working around the clock to get as much of the red metal into the U.S. before new tariffs are imposed, more of them are using bulk carriers.
During the first half of this month, over 71,000 tons of copper were delivered to the U.S. via bulk carriers, with Chile seeing an increase in exports of the metal. Kpler data also shows unusual shipments of 4,500 tons and 10,000 tons from Spain and Germany, as these countries don’t usually export the red metal to the U.S.
For companies like Platinum Group Metals Ltd. (NYSE American: PLG) (TSX: PTM) that have properties with proven deposits of copper, things are looking up as they look set to deliver improved shareholder value if market conditions remain favorable for this metal over the coming decades.
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