LONDON: Aluminium prices fell on Thursday as markets continued to assess the impact of US President Donald Trump’s decision to impose 25% tariffs on steel and aluminium imports from March 12.
Three-month aluminium on the London Metal Exchange (LME) was down 0.4% at $2,611.5 a metric ton in official open-outcry trading, while copper was steady at $9,455.
More than half of the aluminium used in the United States is imported, with the vast majority coming from Canada. Much of the Canadian supply comes from Quebec, whose Premier Francois Legault on Wednesday said that Canada should consider export tariffs on products like aluminium “where they really need us”. Copper has not been affected by any US decisions so far, but as Trump promised tariffs on the metal in late January, the premium for US Comex copper futures over the LME contract rocketed to a record high earlier this week.
The proclamations on the 25% steel and aluminium tariffs this week were extensions of Trump’s previous 2018 Section 232 tariffs aimed at protecting domestic steel and aluminium makers on national security grounds.
“Implicitly, the same mechanism could not be used to apply tariffs to other commodities in short order, as it would first require a related investigation by the Department of Commerce,” Marcus Garvey, head of commodities strategy at Macquarie, said in a note. “This suggests recent volatility in the CME-LME copper spread … is likely to have been excessive, albeit prices remain vulnerable to either blanket tariffs or country specific tariffs that would impact a large portion of US imports,” he added.
Last week, Trump delayed a 25% tariff on goods from Mexico and Canada until March to allow negotiations over steps to secure US borders and halt the flow of the drug fentanyl. LME zinc fell 0.3% to $2,854 a ton in official activity, lead rose 0.7% to $1,986.5 and tin was up 0.4% at $31,700. Nickel lost 0.7% to $15,310 as stocks in LME-registered warehouses rose to 180,900 tons after 5,094 tons were delivered in.
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