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Business Recorder
2 minutes ago
- Business
- Business Recorder
US copper hits record high, expanding premium over the LME benchmark
LONDON: US copper futures hit a record high on Thursday, expanding their premium against the global benchmark with just over a week left until the planned date for the US import tariff on the metal. The most active COMEX copper futures rose 1.2% to $5.888 a lb after hitting a peak of $5.959, while the three-month copper on the London Metal Exchange fell 0.2% to $9,910 a metric ton in official open-outcry trading. The premium of COMEX over LME copper expanded to 31% from 29% on Wednesday. The premium remained below the 50% import tariff planned by President Donald Trump as the market was waiting for confirmation of the August 1 deadline and a list of the copper products to which the levy would apply. 'We are cautious of copper's current upward momentum. Any shift in the Trump's tariff policy – whether there are any exemptions or the rate itself is toned down – could see the COMEX premium falling,' said ING commodities analyst Ewa Manthey. Copper stocks in the COMEX-owned warehouses jumped 163% over the last four months, but inflows to them have been slowing down in recent days. This trend is likely to persist, improving availability of copper outside the US and keeping the global copper prices under pressure, Manthey said. Apart from the approaching August 1 deadline for the US copper import tariffs, the metals market focus is on China-US trade talks due in Sweden next week, US trade talks with other countries, and Washington's ongoing investigation into potential import tariffs for some critical minerals. Among other LME metals, tin was steady at $34,845 a ton in official activity after touching $35,100, for its highest since April 7, earlier in the session. Supporting the metal are low stocks in the LME-registered warehouses and large holdings of tin warrants - title documents conferring ownership. Aluminium lost 0.1% to $2,648 a ton, while zinc fell 0.3% to $2,853. Both hit a four-month high earlier in the session. Lead and nickel eased 0.2% to $2,028 and $15,540, respectively.
Yahoo
7 hours ago
- Business
- Yahoo
Freeport-McMoRan Eyes Major Gains From US Copper Tariff
Copper giant Freeport-McMoRan Inc. (NYSE:FCX) delivered stronger-than-expected second-quarter results on Wednesday, driven by robust copper and gold sales, improved pricing, and reduced costs. Following this positive earnings report, market observers are closely analyzing the company's prospects. Among these, Sam Crittenden, an analyst at RBC Capital Markets, has expressed a confident outlook for Freeport-McMoran. He believes the company is exceptionally well-positioned to capitalize on the rising U.S. copper prices and the impending import tariff. After reviewing the second-quarter earnings, Crittenden reaffirmed his $54 price forecast and a Sector Perform rating for the noted that about one-third of Freeport's copper sales are tied to the U.S. market, where COMEX prices have surged to $5.85 per pound, well above the $4.47 per pound seen on the LME. He estimated Freeport's realized price to be $4.93 per pound, significantly ahead of its peers. However, he flagged uncertainty around the proposed 50% U.S. copper tariff, expected to take effect Aug. 1, as changes or exemptions could impact the price spread. Crittenden lowered his 2025 EBITDA forecast by 3% following revised guidance at Grasberg. Due to lower ore grades, Freeport now expects to produce 1.54 billion pounds of copper and 1.3 million ounces of gold next year, down from 1.6 billion and 1.6 million, respectively. The 2026 outlook remains unchanged. Crittenden said Freeport remains a leading copper investment, citing its scale, U.S. exposure, and strong balance sheet. He also pointed to upside catalysts such as a potential Grasberg license extension, expansion projects in the Americas, and possible increases in shareholder returns. Risks include political exposure in Indonesia and copper price volatility. Freeport posted better-than-expected second-quarter results, with adjusted earnings of 54 cents per share, beating estimates by 10 cents. Revenue rose to $7.58 billion, ahead of the $7.09 billion forecast, on stronger copper and gold volumes, lower unit costs, and favorable pricing. Copper sales totaled 1.0 billion pounds at an average price of $4.54/lb. Cash costs dropped to $1.13/lb, well below the company's prior guidance. Gold and molybdenum sales also topped expectations. The miner started operations at its new Indonesian smelter in May and expects first cathode output in July. Capital expenditures reached $1.3 billion in the quarter, with full-year spending expected to total $4.9 billion. Freeport expects to benefit from the U.S. copper tariff beginning next month. With COMEX trading at a 28% premium to LME, the company estimates that every $0.10 of additional spread could add $70 million to second-half cash flow. CEO Kathleen Quirk said Freeport remains 'America's copper champion.' The company continues to focus Indonesian copper sales on Asian markets. Still, it is evaluating shipments to the U.S. It is also considering expanding its Miami, Arizona smelter, though building a new domestic facility remains unlikely. Freeport reaffirmed full-year guidance of 3.95 billion pounds of copper, 1.3 million ounces of gold, and $7.9 billion in projected operating cash flow. Crittenden reaffirmed a $54 price forecast and Sector Perform rating, valuing the company at 1.5x NAV and 8.0x 2025 EBITDA, in line with large-cap copper peers. He estimates Freeport is pricing in $5.06/lb copper, slightly above the current blended spot of $4.93/lb. He sees the company generating $4.5 billion in attributable free cash flow (7% yield) at spot prices. He also points to several long-term catalysts, including a potential Grasberg license extension beyond 2041, brownfield expansion projects, and increased capital returns. Still, he flags risks around political exposure in Indonesia, mine disruptions, and copper price volatility. Meanwhile, Katja Jancic, an analyst at BMO Capital, maintained an Outperform rating for Freeport-McMoran but slightly lowered her price forecast from $55 to $54. Price Action: FCX shares are trading lower by 0.59% to $44.57 at last check Thursday. Read Next:Image by Siwakorn TH via Shutterstock Up Next: Transform your trading with Benzinga Edge's one-of-a-kind market trade ideas and tools. Click now to access unique insights that can set you ahead in today's competitive market. Get the latest stock analysis from Benzinga? FREEPORT-MCMORAN (FCX): Free Stock Analysis Report This article Freeport-McMoRan Eyes Major Gains From US Copper Tariff originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Reuters
13 hours ago
- Business
- Reuters
Copper's physical tariff trade is rapidly unwinding
LONDON, July 24 (Reuters) - U.S. President Donald Trump sprang a double surprise on the copper market when he announced import tariffs of 50% effective next month. The market was betting that tariffs would be set lower and come with a longer lead-time. The futures market is rapidly readjusting, with the CME copper contract punching out record highs as it prices in the higher tariff differential with the London Metal Exchange (LME) contract. So too is the physical supply chain. The August 1 start date signals the end of the race to ship physical metal to the United States to capture the tariff arbitrage. A lucky few with cargoes already afloat may yet cross the finishing line in time, but the physical tariff trade is rapidly unwinding. That's already manifest in rising inventory and loosening time-spreads on the London market. The tariff trade has been a bonanza for merchants and traders ever since the Trump administration announced the launch of a national security investigation into U.S. copper import dependency back in February. It's been such a money-spinner that they've stripped both the physical supply chain and markets of last resort, such as the LME and the Shanghai Futures Exchange (ShFE), for available copper. U.S. imports of refined copper surged to 541,600 metric tons between March and May, equivalent to 60% of imports over the whole of 2024. Flows from traditional sources such as Chile and Peru have accelerated, and they've been supplemented by arrivals of Australian, Asian and European brands of copper. CME inventory has more than doubled since the start of March and at 222,723 tons is now just shy of the 2018 peak. More copper is sitting in the off-market shadows. Analysts are pegging the excess at somewhere between 400,000 and 500,000 tons, which in the view of Citi would "negate U.S. copper import demand for the rest of 2025." Allowing for continued flows of metal under long-term supply contracts, it could take up to nine months to work off the mountain of metal, according to Macquarie Bank. It won't take that long for the global supply chain to adjust, judging by rising stocks and looser spreads on the London market. Indeed, the benchmark cash to three months period flipped from backwardation to contango almost immediately on the tariff confirmation, as 25,000 tons of copper earmarked for physical load-out were dumped back in the market. With the shipping window to the United States now closed, LME inventory has jumped by 33,525 tons this month, thanks in large part to shipments by Chinese producers. Chinese exports of refined copper have been accelerating since March in response to the U.S. drain on LME stocks and the resulting spread tightness. LME warehouses in Taiwan and South Korea have traditionally been the prime locations for receiving Chinese metal, but the opening of exchange warehouses in Hong Kong now allows for faster delivery. Exchange warehouses on the island have already received 5,975 tons of copper since opening for business on July 15. There may be more to come. The LME benchmark spread is now in a comfortable contango of $66 per ton, compared with a backwardation of more than $300 per ton at the end of June. Trump's tariffs have split global copper pricing between the United States and the rest of the world. Copper bulls are cheering CME's rise to new historic highs, but this is a direct reaction to higher than expected import tariffs rather than a reflection of global market dynamics. The CME spot premium over the LME price has jumped from $1,233 per ton on July 7 to $3,095. In terms of the implied tariff impact on U.S. pricing, the CME price differential has widened from 13% to 31% since Trump pulled the tariff trigger. The LME three-month price , by contrast, remains locked in a sideways range just below $10,000 per ton, still a good way short of the record highs above $11,000 per ton seen in May 2024. Despite the mass relocation of global inventory towards the United States, total exchange stocks are little changed on the start of the year. Including both LME off-warrant stocks and copper registered with ShFE's international INE arm, global exchange inventory is currently down by just 18,000 tons on the start of January. The stable LME price, rather than the overheated U.S. price, captures that ambiguous reality. The devilish detail in the new tariffs is conspicuously lacking. Will copper product imports be included? Will there be restrictions on U.S. exports of copper scrap? Will there be exemptions for favoured suppliers? We don't yet know, but it's clear that global pricing has just fractured. Doctor Copper now has a transatlantic double, but the real reflector of global manufacturing activity is the one in London, not the U.S. doppelganger. The opinions expressed here are those of the author, a columnist for Reuters.
Reuters
17 hours ago
- Business
- Reuters
Canada's Teck Resources beats profit estimates for second quarter
July 24 (Reuters) - Canadian miner Teck Resources ( opens new tab beat second-quarter profit estimates on Thursday, helped by improved profitability at its Trail operations. Teck's Trail operations, located in British Columbia, is one of the world's largest fully integrated zinc and lead smelting and refining complexes, according to the company website. The company reported an adjusted profit of 38 Canadian cents per share for the quarter ended June 30, compared with analysts' average estimate of 27 Canadian cents per share, according to LSEG data. Teck said London Metal Exchange (LME) copper prices declined by 2% in the June quarter compared with a year earlier and averaged $4.32 per pound. The company produced 109,100 metric tons of copper in the reported quarter, and cut its full-year copper production guidance to 470,000 tons to 525,000 tons. Teck expects to produce 525,000 tons to 575,000 tons of zinc in the current year. The results come against the backdrop of U.S. President Donald Trump's threat to impose a 50% tariff on copper imports, starting August 1. Teck exports the vast majority of its copper to Asia and Europe. Trump's proposed 50% tariff on U.S. copper imports is unlikely to directly impact Teck, given its minimal exposure to the U.S. market. However, the tariff could tighten global supply and push prices higher, indirectly boosting Teck's revenue and margins.
Mint
a day ago
- Business
- Mint
Gold Drops as US Deal With Japan, EU Talks Ease Trade Concerns
Gold dipped after a three-day rally as US President Donald Trump's deal with Japan and a report on progress over talks with the European Union allayed trade war concerns that have stoked demand for haven assets. Bullion retreated as much as 1.4% after Trump said he would impose 15% levies on goods from Japan, while the Financial Times reported that the US and EU were closing in on a similar deal. The terms with Japan were better than most investors expected, following fraught negotiations. Commerce Secretary Howard Lutnick said earlier that Japan's pledge of hundreds of billions in US investments 'could be' a model for the EU. Investors will also continue to seek clarity on the progress of trade negotiations with several other countries including China. Gold has climbed almost 30% this year, as uncertainty around Trump's aggressive attempts to reshape global trade and conflicts in Ukraine and the Middle East sparked a flight to safety. The precious metal has consolidated within a tight range over the past few months, though this week's gains of about 1% have pushed prices roughly $100 short of April's record high above $3,500 an ounce. Spot gold traded was down 1.3% at $3,385.81 an ounce as of 12:17 p.m. in New York. The Bloomberg Dollar Spot Index was lower. Platinum and palladium fell. Silver, meanwhile, fell slightly after reaching the highest since 2011 earlier Wednesday. The white metal has advanced 36% this year, with gains recently outpacing gold. Unlike gold, silver is mostly used as an industrial input. That source of demand has grown in recent years, particularly for its application in solar cells. Solar photovoltaics accounted for nearly 200 million ounces of demand in 2024, quaduple the level of a decade before, according to figures from the Silver Institute. Against that backdrop, the market is headed for a fifth year in deficit, according to the indusry group. There has also been evidence of tightness in the London market, the dominant trading venue for spot silver, after nearly half a million ounces flooded into US warehouses on tariff fears. The cost of borrowing the metal has jumped above historical norms, while growing exchange-traded fund holdings further erode the amount of metal freely available to buy. The higher-than-expected 50% US tariff on copper also jolted the silver market, leading to US premiums for the white metal jumping to 80 cents an ounce, before paring back. Silver has been exempted from tariffs, but the high tax on another industrial metal highlighted the tail risk of futures levies. US front-month copper futures are now trading at a record premium over LME prices, with the gap reaching about $2,900 a ton on Wednesday. That's nearly 30% above the price in London. The metal was up 0.1% on the LME at $9,926 a ton. Aluminum edged lower, while nickel rose and zinc was flat. With assistance from Sybilla Gross. This article was generated from an automated news agency feed without modifications to text.
