Copper shares are leading the falls on the ASX on Friday, after doubts were raised about the US imposing tariffs on the vital industrial metal.
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Tariffs fears have been boosting prices
The copper price has been hitting record highs recently amid fears the US will impose tariffs in a bid to promote more home-grown mining and production.
Reports indicate that traders have been importing copper into the US and building up stockpiles ahead of the rumoured tariffs, helping push prices higher.
But a report from Reuters overnight suggested that the White House was still weighing up the higher costs tariffs could impose on the US' manufacturing sector against the benefits of encouraging more domestic mining.
Reuters quoted a White House official as saying all options remained on the table.
They said:
The administration continues to evaluate all options to reshore copper and other critical manufacturing back to the United States.
This has been interpreted by market watchers as suggesting tariffs may not be imposed, leading to sharp falls in the share prices of copper miners.
Among the Australian-listed producers, shares in Develop Global Ltd (ASX: DVP) fell 9.6%, Capstone Copper Corp (ASX: CSC) fell 7.8%, and Sandfire Resources Ltd (ASX: SFR) fell 6.7%.
Shares in BHP Group Ltd (ASX: BHP), which now derives more than half of its earnings from copper, fell 3.7%, while Rio Tinto Ltd (ASX: RIO) shares were off 2.7%.
"No tariff" decision could ease prices
Morgan Stanley said the Reuters report gave slightly more weight to a "no tariff" scenario.
They added:
Today's article does not constitute a decision but it arguably has driven the market to give slightly more weight to the "no tariff" scenario than before. Copper prices are up around 15% YTD with both benchmarks hitting all time highs in recent days, with much of this year's strength arguably attributable to strong US import demand ahead of potential tariffs. We estimate US excess imports have now exceeded 450 kt YTD, or 2.5-3% of global refined copper demand when annualised. However, if those imports were to slow down, the copper market would feel substantially looser in our view.
Morgan Stanley said the proposed tariffs would be 15% on refined copper from the start of January 2027, potentially rising to 30% in 2028.
The Reuters article confirmed that an update report on the US copper market, due on June 30, had been given to the US President.
Copper demand is expected to remain strong in coming years as the electrification of the economy gains pace.
