Copper rises on Trump tariff report - ING

Copper moved higher yesterday following a report the incoming Trump administration will slowly increase trade tariffs rather than impose sizable duties in one go, which weighed on the dollar. According to the report, the plan would boost import duties 2-5% a month on trade partners, ING's commodity analysts Warren Patterson and Ewa Manthey note.

Copper is up more than 4% so far this year

"During his presidential campaign, Trump threatened to impose minimum tariffs of 10% to 20% on all imported goods, and 60% or higher on shipments from China. The proposed approach is reportedly aimed at boosting negotiating leverage and helping to avoid a spike in inflation, however, it is still in its early stages and hasn't been presented to Trump yet."

"We believe the timing as well as the scope of the US tariffs will be key for demand for Copper and other industrial metals this year. A continued trade war remains the key downside risk to our industrial metals outlook. However, the prospect of a prolonged trade war has raised expectations for Beijing to unveil more aggressive stimulus measures. We believe Trump's tariffs could trigger bigger stimulus from China, limiting the downside to Copper prices. Copper is up more than 4% so far this year."

"The latest LME COTR report shows that speculators increased their net long position in Copper by 4,203 lots for a second consecutive week to 62,767 lots for the week ending 10 January, the highest since the week ending on 29 November. Similarly, net bullish bets for Aluminum rose by 1,294 lots to 105,528 lots at the end of last week. In contrast, money managers decreased net bullish bets for zinc by 1,835 lots for a fourth consecutive week to 27,095 lots as of last Friday."