Copper tariffs are likely to be passed off to consumers, says BoA Securities' Michael Widmer

Tariff Impact on Copper Market - Copper prices are near record highs, experiencing the best week since March 2022, following President Trump's announcement of a 50% tariff on copper imports starting August 1st [1] - The market has priced in about half of the 50% tariff at the moment [1][2] - The tariff is expected to impact upstream manufacturers, midstream companies, and ultimately, consumers, as companies likely cannot absorb a 50% margin reduction [3] Domestic Production and Capacity - The focus should be on building smelting capacity in the US, as the country exports more scrap and concentrates than it imports in refined copper [5] - Reactivating smelting capacity will take time, with meaningful impact unlikely within the next 12 to 18 months [6] - Currently, treating scrap and concentrates in the US is not very economic [6] Market Dynamics and Pricing - The spread between London and New York copper prices reflects the extent to which the tariff is priced in [7] - There is some holding back on the buyer side to bid up CME due to the tariff not being fully priced in [7] - Consumers expressed concerns about their ability to absorb tariffs, similar to the aluminum market when tariffs were introduced [8]