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Yahoo
09-07-2025
- Business
- Yahoo
Copper Skyrockets to New Highs: ETFs to Ride the Tariff Talks
Copper futures skyrocketed as much as 17% on Tuesday to an all-time high after U.S. President Donald Trump threatened to impose a 50% tariff on imports of the commodity, sparking fears of a big supply chain disruption. The surge marked the biggest intraday increase for the commodity since smooth trading in copper has pushed the ETFs linked to this commodity higher. United States Copper Index Fund CPER spiked 8.4%. Copper miner ETFs also surged as mining companies act as a leveraged play on the underlying metal prices and thus tend to experience more gains than their bullion cousins in a rising metal market. Sprott Junior Copper Miners ETF COPJ gained 2.8%, Sprott Copper Miners ETF COPP rose 2.2% and Themes Copper Miners ETF COPA increased 1.3%. The proposed tariffs, potentially effective in late July or August, are likely to drive up costs across a wide swath of the U.S. economy, impacting industries from electronics and EVs to construction and data centers. Fearing increased costs, U.S. companies accelerated their copper purchases to stockpile the metal before the enactment of any tariffs. This surge in demand drove U.S. copper prices to record highs. The sudden price surge is expected to intensify this trend in the short term (read: Copper Hits a Three-Month High: ETFs in Focus).According to the U.S. Geological Survey, over half of the refined copper used in the United States is imported — 38% from Chile, 28% from Canada and 8% from Mexico. With demand for copper expected to surge due to the global energy transition, the United States could face increasing pressure on its copper supply. Copper has been facing supply constraints due to a lack of mineral investment and reduced refinery capabilities. Analysts predict a global copper deficit of more than 200,000 tons in 2025, underscoring the imbalance between supply and growing demand. The demand for copper has been on the rise amid a rush to build data centers and the continued electrification of the global economy. The red metal is an integral element in manufacturing electric vehicles, power grids and wind turbines, especially as the global economy electrifies. It is also a key metal for cables used in data centers, whose growth has been fueled by an artificial intelligence boom. Morgan Stanley noted the tariffs would likely inflate domestic prices in the short term as import costs rise, though they expect the effect to fade as local inventories build. Bernstein, in a note released just before Trump's announcement, predicted higher copper prices through year-end amid expectations of U.S. tariff action and shifting inventories into U.S. warehouses. United States Copper Index Fund (CPER) United States Copper Index Fund seeks to track the performance of the SummerHaven Copper Index Total Return. The index is designed to reflect the performance of the investment returns from a portfolio of copper futures contracts on the COMEX exchange. United States Copper Index Fund has accumulated $219.8 million in its asset base and charges 1.04% in annual fees. It trades in an average volume of 174,000 shares a day and has a Zacks ETF Rank #3 (Hold) with a High risk Junior Copper Miners ETF (COPJ)Sprott Junior Copper Miners ETF is the only pure-play ETF focused on small copper miners, selected for their potential for significant revenue and asset growth by tracking the Nasdaq Sprott Junior Copper Miners Index. It holds 44 stocks in its basket, with Canadian firms taking the largest share at 50.4%. Australia and the United States round off the next two spots. Sprott Junior Copper Miners ETF has AUM of $14.8 million and trades in a lower average daily volume of 13,000 shares. It charges 76 bps in annual fees and Copper Miners ETF (COPP) Sprott Copper Miners ETF is the only ETF to provide pure-play exposure to copper miners and physical copper. It tracks the Nasdaq Sprott Copper Miners Index and charges 65 bps in annual fees. Holding 54 stocks in its basket, Canadian firms take the largest share at 45.4%, followed by 31% in the United States. COPP has AUM of $29.9 million and trades in average daily volume of 22,000 shares. Themes Copper Miners ETF (COPA)Themes Copper Miners ETF follows the BITA Global Copper Mining Select Index, which identifies companies that derive their revenues from copper mining, exploration, refining, and royalties. It holds 53 stocks in its basket, with Canadian firms making up for 34.2% followed by the United States (16.4%) and China (14.9%). Themes Copper Miners ETF has gathered $1.1 million in its asset base and trades in an average daily volume of under 1,000 shares. It charges 35 bps in annual fees. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sprott Junior Copper Miners ETF (COPJ): ETF Research Reports Sprott Copper Miners ETF (COPP): ETF Research Reports Themes Copper Miners ETF (COPA): ETF Research Reports This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
07-07-2025
- Business
- Yahoo
CPER Sinks as China, Dollar Tariffs Weigh on Copper
The United States Copper Index Fund (CPER), a popular way for investors to gain exposure to the industrial metal, finds itself down from a range of negative forces, as the exchange-traded fund sank more than 2% in Monday afternoon trading. This recent dip in spot copper prices, which began July 3, comes after a period of robust performance, leaving many to wonder about the immediate future for the bellwether commodity. The current weakness in copper can be attributed to a confluence of factors, including resurfacing trade tensions, a notable buildup in inventories and a softening of short-term demand. Several immediate catalysts are contributing to the recent downtrend in copper prices, weighing on the CPER ETF, which tracks copper futures contracts and provides convenient access to the metal's price movements. Renewed tariff tensions and heightened trade policy uncertainty are casting a long shadow. Reports suggest that the looming prospect of U.S. tariffs, with deadlines approaching, is causing industrial players to exercise caution, potentially leading to reduced inventory accumulation and a deferral of capital expenditures. This "wait-and-see" approach translates directly into a temporary slowdown in demand for copper. There's been a noticeable increase in global copper inventories, particularly at major Chinese ports. Data indicate a substantial week-over-week rise in nationwide copper inventories in early July. When supply in warehouses grows significantly faster than immediate consumption, it naturally puts downward pressure on prices, regardless of long-term fundamentals. This inventory buildup reflects not only increased import volumes but also a weakening in short-term consumption. While the U.S. dollar has weakened in 2025, it's inched 1% higher since July 3, as copper is primarily traded in U.S. dollars on global markets and a stronger dollar makes the commodity more expensive for international buyers using other currencies. This effectively dampens global demand, contributing to price declines. Recent U.S. economic data, such as robust employment reports, can bolster the dollar, inadvertently putting pressure on dollar-denominated commodities like copper. Despite the current short-term headwinds, the long-term outlook for copper remains overwhelmingly bullish, driven by powerful structural trends. The most significant factor is the global energy transition. Copper is an indispensable component in nearly all green technologies, from electric vehicles (EVs), which use significantly more copper than traditional internal combustion engine vehicles, to renewable energy infrastructure like solar panels and wind turbines. The vast expansion of electrical grids, necessary to support increased electrification and intermittent renewable energy sources, also demands colossal amounts of copper. Furthermore, the burgeoning demand from data centers to power artificial intelligence infrastructure represents another rapidly growing area of copper consumption. Beyond demand, the supply side faces inherent constraints. Developing new copper mines is a capital-intensive, time-consuming process, with lead times from discovery to production often stretching well over a decade. The recent decline in spot copper prices, reflected in ETFs like CPER, highlights the inherent volatility of commodity markets. While immediate factors such as trade uncertainty, inventory surges and seasonal demand weakness are influencing the current pullback, investors should remember that the industrial metal is also supported by powerful, long-term secular growth drivers. As with any metal or commodity investment, understanding both the short-term catalysts and the long-term fundamentals while recognizing the speculative nature of spot prices is crucial for making informed investment decisions. Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in ETFs involves risks, and investors should carefully consider their investment objectives and risk tolerance before making any investment decisions. At the time of publication, Kent Thune did not hold a position in any of the aforementioned | © Copyright 2025 All rights reserved
