Copper futures on the Multi Commodity Exchange (MCX) experienced a slight downturn, trading at Rs 885.95 per kg, marking a 0.20% decline. This local dip contrasts with the positive movement observed in international markets, where COMEX copper stood at $4.44 per pound and London Metal Exchange (LME) three-month contracts reached $9,687 per metric ton.

U.S. Tariffs Impact Indian Copper Market

The recent decline in MCX copper futures can be attributed to the U.S. government's decision to impose a 50% tariff on semi-finished copper products, effective August 1. This move triggered a significant 4% plunge in MCX copper futures, pushing prices to record lows near Rs 861.70 per kg.

Global Factors Providing Support

Despite the local pressure, some positive support for copper prices emerged from international events. Operations at Chile's El Teniente mine were suspended following a tunnel collapse, potentially affecting global supply and lending some stability to prices.

Inventory Dynamics

The copper market has witnessed a dramatic shift in inventory levels. Available copper stocks have plummeted by 76% since mid-February, primarily due to accelerated cargo movements to the United States. This surge in shipments is largely in response to ongoing import investigations in the U.S.

Market Outlook and Trading Strategy

In light of these market dynamics, Religare Broking has issued a strategic recommendation for copper traders:

• Strategy: Buy-on-dips
• Support Levels: Rs 879-881 per kg
• Stop Loss: Below Rs 870
• Target Price: Rs 900-905 (contingent on clearing resistance at Rs 889-890)

Market Implications

The current scenario presents a complex picture for copper traders and investors:

• International prices show resilience
• Indian market faces headwinds from U.S. trade policies
• Significant reduction in copper stocks
• Production issues in Chile add uncertainty

Traders and investors are advised to closely monitor both domestic and international factors affecting copper prices, including further developments in U.S. trade policies, global supply disruptions, and inventory levels across major exchanges.

In a move that sent ripples through the global copper market, President Donald Trump has imposed a 50% tariff on semi-finished copper products imported into the United States. The new policy, set to take effect on August 1, has caught the attention of industry players and market watchers alike.

Tariff Scope Narrower Than Expected

Contrary to widespread market expectations, the tariff announcement came with a significant caveat: refined copper has been excluded from the new duties. This decision has taken many by surprise, as there were widespread anticipations of broader tariffs that would have included raw copper—a crucial component in wiring and various products essential to the homebuilding, construction, and automobile industries.

Market Reaction

The copper market's initial response to the news was dramatic. Prices experienced a sharp decline, plummeting by 18% in the immediate aftermath of the announcement. However, as traders and investors digested the full implications of the narrower-than-expected tariff scope, the market showed signs of recovery.

Current Copper Prices

After the initial shock, copper prices have partially rebounded. At the time of reporting, copper was trading at $5.13 per pound, reflecting the market's adjustment to the new tariff landscape.

Implications for Industry

The exclusion of refined copper from the tariffs is likely to have significant implications for various sectors:

1. Semi-Finished Copper Product Manufacturers: Companies producing semi-finished copper products for export to the US may face challenges due to the 50% tariff, potentially leading to reduced competitiveness in the US market.

2. Refined Copper Producers: With refined copper spared from the tariffs, producers and exporters of this commodity may find their position in the US market relatively unchanged or potentially strengthened.

3. US Domestic Industries: American industries relying on imported semi-finished copper products might face increased costs, while those using refined copper could be less affected.

4. Global Supply Chains: The tariffs could lead to shifts in global copper supply chains as companies adjust to the new trade dynamics.

As the August 1 implementation date approaches, market participants will be closely monitoring further developments and potential responses from affected countries and industries. The full impact of these tariffs on the global copper market and related industries remains to be seen, with potential for further price volatility and supply chain adjustments in the coming months.