Metals Generally Declined, Copper Futures Fell Due to Low Risk Appetite [LME Closing on March 28]

On Friday, March 28, copper prices on the London Metal Exchange (LME) declined due to subdued risk appetite ahead of the deadline for the US to impose reciprocal tariffs next week, deteriorating global economic growth prospects, and reduced motivation to deliver copper to the US ahead of potential tariff implementation.

At 17:00 London time (01:00 Beijing time on March 29), three-month copper futures closed down $52, or 0.53%, at $9,794.5 per mt, after hitting a two-week low of $9,739 during the session.

Copper prices have risen 12% so far this quarter, on track for the largest quarterly gain in four years, prompting some investors to take profits.

Uncertainty remains high as the US plans to announce reciprocal tariffs on countries responsible for the majority of its trade deficit on April 2, while the previously announced 25% tariff on automobiles will take effect on April 3.

Previously, the market expected the US investigation into whether to impose new import tariffs on copper to take months, but this expectation was shortened to weeks on Wednesday, narrowing the arbitrage gap between the most actively traded copper futures on the New York Mercantile Exchange (COMEX) and the LME.

As a global benchmark, the premium of COMEX over LME copper futures pulled back to $1,523 per mt, or 15%, after hitting a record high of $1,615 earlier this week.

Alastair Munro, senior base metal strategist at brokerage firm Marex, said market speculation suggests that if the US announces tariffs on copper soon and does not exempt copper already in transit, these shipments could be diverted to LME-registered warehouses, adding additional resistance to the market.

Copper inventory warrants in the LME system are currently at their lowest level since May, with a significant decline since early February as traders rushed to conduct swap trades and redirected supplies to the US.

BNP Paribas stated in a report: "We expect that the tariff hike will end the current chaos in copper prices, allowing the market to focus on the negative demand impact of US trade policy."

BNP Paribas forecasts that copper prices will fall to $8,500 per mt in Q2 and has lowered its global copper demand forecast for 2025 by 0.8%. The bank expects a surplus of 460,000 mt in the market this year due to slowing demand growth.