Michael Widmer, BoA Securities head of metals research, joins 'Money Movers' to discuss the market moves in the metal commodities space.

Copper prices are nearing record highs following the announcement of a 50 percent tariff on copper imports by President Trump, set to take effect soon. Michael Widmer, head of metals research at Bank of America Securities, explained that the market has only partially priced in these tariffs, suggesting further price adjustments may occur if the tariffs remain in place.

Widmer noted that the tariffs are likely to affect not only upstream manufacturers but also consumers, as companies may not be able to absorb the full cost increase. He also highlighted that increasing domestic smelting capacity in the U.S. would take time, making it unlikely that the country could quickly offset the impact of reduced imports. The spread between copper prices in London and New York reflects the partial pricing in of the tariffs, with ongoing market negotiations and concerns about the ability to absorb the added costs.

Copper tariffs likely to be passed off to consumers: Michael Widmer

Copper now hovering near record highs and on track for its best week since March of 2022 after President Trump announced plans for a 50 percent tariff on copper imports starting on August 1st. It looks like right now it's off by about eight tenths of a percent. Let's bring in Michael Widmer, Bank of America securities head of metals research. Is the market pricing in these tariffs, Michael? It is, but not fully. I think we're halfway there in having those tariffs priced in. I think over time we're probably going to get there if those tariffs stick, which implicitly means that there is potentially still a bit more room to run on CME. How much of duties do you think, for instance, the CME is already pricing in? About half of it at the moment. And who gets hit with this? Is it the upstream companies, those that are using refined copper? Who bears the brunt of these tariffs? Yeah, I think we're getting more clarity about that. I think the initial announcement was really just about a 50 percent copper tariff. But it seems kind of replicating what we've had on steel and aluminum, that we're actually getting a tariff on copper and copper derivative products, which then ultimately means that on the one hand, very much up, very high upstream, the manufacturers, midstream as well. And then ultimately, I think there is probably strong anecdotal evidence that companies cannot absorb a 50 percent tariff through the margins. So ultimately, I think some of that will also get added onto the consumer. Michael, a couple of questions. One is we've had a lot of conversations on air this week about how much production we could energize domestically with smelters that are not operating and make up for that, any lost exports. Any sense of how much we could make up? Yeah, look, I mean, this is a really important point, because there's a lot of talk about how many mines we need to build in the U.S. But in fact, to your point, it is the smelting capacity that we need to that we need to build. We are exporting more scrap and constructs than we are actually importing in refined copper. Reactivating will take time. So I think I would be surprised if we saw anything meaningful within the next 12 to 18 months. Over time, you should potentially see that most of that, most of the scrap and the constructs will be treated in the U.S. It's not very economic at the moment, but look, the framework is in place, I think. Right. The other thing that got some note this week was the spread between London and New York. I'm wondering, does that tell us something about America's ability to absorb this relative to other parts of the world? The spread between London and New York on the copper side is effectively just showing you what kind of tariff we have priced in at the moment. Clearly, at the moment, because we don't have the full tariff price in, there seems to be some holding back on the buyer side to bid up CME. Some inventories out there, I think on the aluminum side, when tariffs were introduced, we certainly also heard from the consumers that there was a lot of concerns about the ability to absorb all of those tariffs. So I think there's a bit of to and fro on the negotiation side at the moment. But at the moment, yes, we are lagging a little bit. That's fair to say.

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