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Copper Prices: Tariffs, Labor Negotiations and Electric Vehicles

Copper Prices: Tariffs, Labor Negotiations and Electric Vehicles

If you don’t like the price of copper, stick around, it will most likely change. No guarantees it will change in your favor, but if history tells us anything, the price will change – and it can happen quickly.

This time last week, copper opened at $3.24 a pound. This morning, and about 6% lower, the price per pound opened at $3.06 and is below the traditional ‘safe’ plateau of $7,000 a ton at $6,830.

And just think, two weeks ago copper saw highs it had not seen since January 2014!

Many commodities experts point to uncertainty of a possible trade war between the United States and China after President Trump asked the U.S. Trade Representative to identify $200B worth of Chinese products that will be subject to additional tariffs of 10% “if China refuses to change its practices, and also if it insists on going forward with the new tariffs that it has recently announced.”

“The U.S. has initiated a trade war,” China’s Commerce Ministry declared, adding that it will respond with “comprehensive quantitative and qualitative measures and retaliate forcefully.”

More Traditional Impact

Others point to the more traditional supply and demand situations and possible labor issues at copper mines around the world. The current situation the market is keeping an eye on is the labor talks currently underway at the Escondida copper mine in Chile – one of the largest mines in the world.

“A strike or tense negotiations could cause the price of copper to move to the upside given the current states of the global economy and rising demand for the red metal around the world,” states frequent tED contributor Andrew Hecht of Seeking Alpha. “The union is optimistic that it can reach a deal with BHP, but the market is concerned that talks could break down tightening the supply situation in the copper market which would send the price higher.”

Last year, workers at Escondida went on strike for 44 days, removing 156,000 metric tons of output from the market.

Electric Vehicles Could Drive Copper Higher

A new report by BMO Capital Markets about the renewable energy infrastructure paints a great picture for the future of copper.

A Mining.com article points to solar, wind and electric cars as fueling a surge in demand for copper over the next few years.

The Week Ahead

Investing.com has compiled a list of significant events likely to affect the markets this week.

Monday, June 18

Financial markets in China were closed for a holiday.

Atlanta Fed President Raphael Bostic spoke at an event in Savannah.

ECB President Mario Draghi spoke at the ECB Forum on Central Banking, in Portugal.

San Francisco Fed chief John Williams spoke at an event in New York.

Tuesday, June 19

The Reserve Bank of Australia is to publish the minutes of its latest policy-setting meeting.

ECB head Mario Draghi is to speak at the second day of the central bank’s forum in Portugal.

The U.S. is to release data on building permits and housing starts.

Wednesday, June 20

ECB head Mario Draghi, along with Bank of Japan Governor Haruhiko Kuroda and Fed Chairman Jerome Powell, are due to participate in a panel discussion at the ECB forum in Portugal.

The U.S. is to produce figures on existing home sales.

Thursday, June 21

New Zealand is to release data on first-quarter economic growth.

The Swiss National Bank is to announce its latest monetary policy decision and hold a press conference following its policy meeting.

The UK is to report on public sector borrowing figures.

Deutsche Bundesbank President Jens Weidmann is to speak at an event in Paris.

The Bank of England is to announce its latest monetary policy decision.

The U.S. is to release the weekly jobless claims report along with data on manufacturing activity in the Philadelphia region.

BoE Governor Mark Carney is to speak at an event in London.

Friday, June 22

The euro zone is to release data on manufacturing and service sector activity.

Canada is to round up the week with reports on consumer inflation and retail sales.

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Jim Williams

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