U.S. aluminum and copper futures prices rise sharply

The aluminum and copper markets are beginning to realize Trump’s tariffs. In futures trading, which predicts prices at a certain time in the future, U.S. prices have risen sharply relative to other countries. Although it is still unpredictable whether the tariffs will actually be imposed, nonferrous metals professionals have begun trading with the tariffs in mind.

“The proposal to clearly target steel and aluminum was unexpected,” said the head of the aluminum industry at a large Japanese trading company. Unlike the general tariffs proposed before Trump took office, steel and aluminum have become the focus, and the tension among stakeholders is increasing.

The U.S. government will impose a 25% tariff on steel and aluminum products imported from the United States from March 12. After the presidential order was signed on February 10, aluminum, whose futures market is more developed than steel, was the first to react.

The “premium” paid on top of the aluminum ingot price of the London Metal Exchange (LME), which is an international indicator for assessing aluminum prices, has attracted much attention. This reflects freight costs and supply and demand conditions in each region.

The Chicago Mercantile Exchange (CME) in the United States has aluminum futures products linked to premiums for the Midwest. March futures, which reflect the price after the implementation of tariffs, rose to $0.34 per pound (about $750 per ton) on February 10, up 2% from the weekend of the previous week, and continued to rise.

According to the deal with Trump, the tariffs may be exempted, so the premium has not yet been fully factored in. Many people believe that “if a 25% tariff is imposed on aluminum prices, the premium may exceed the level of $1,000 per ton.”

At present, emergency purchases are also increasing, and the premium of spot (immediate contracts) is also rising. This situation can be said to have already incurred tariff costs.

On February 25, US President Trump signed a presidential order to impose tariffs on copper and instructed the US Department of Commerce to conduct an actual investigation. Affected by this, the price of copper futures on the New York Mercantile Exchange (COMEX) in the United States rose sharply, and the May copper futures with large trading volume rose 3% at one point to $4.7065 per pound (10,400 per ton). At Beijing time on the 26th, the price was still rising.

Copper prices have been rising due to concerns that copper may become the next target. On February 13, the price of the most actively traded settlement month rose to $4.778 per pound (US$10,500 per ton), and the price difference with the LME three-month futures, which is an international benchmark for copper, widened to more than $1,000 on the same day, a rare event.

The United States is highly dependent on copper imports. According to data from the United States Geological Survey (USGS), 45% of copper consumption in 2024 will depend on imports. From the perspective of the source of imported smelted copper (2020-2023), Chile accounts for the largest proportion, accounting for 65%. The United States also imports a large amount of smelted copper from Canada (17%) and Mexico (9%), which are scheduled to start tariffs on March 4.

Naohiro Niimura, co-representative of Japan Market Risk Advisory, said, “Tariffs against Canada and Mexico may have an impact on copper. If copper is also subject to tariffs, the price difference will further widen.”

Tariffs will increase the circulation price in the United States. Bill Oplinger, CEO of Alcoa, an American aluminum giant, predicted at the Metals and Minerals Conference on the 25th that the United States may lose about 100,000 jobs. He said, “This is a bad thing for workers in the American aluminum industry.”

Japan cannot sit idly by. Marubeni Light Metals Division Director Akasaka Hideyuki pointed out that “Australia, which has a trade surplus from the US perspective, may be exempted from aluminum tariffs.” He said, “Australia’s aluminum exports to the United States are expected to increase, and the supply of aluminum ingots exported to Japan may be tightened.”

The aluminum premium for Japan is determined through quarterly negotiations. Due to the view that China, a major aluminum producer, will reduce exports, the premium from January to March has soared to the highest level in about 10 years. Aluminum is mainly used in automobiles and building materials, so the burden on consumers is also great.