Scrap Copper Export Caps Unlikely to Shift U.S. Metal Market
Proposed limits on U.S. scrap copper exports to reduce overseas dependence are not expected to impact much. Exports are already below the planned cap. A new tariff requires 25% of high-quality copper scrap to be sold domestically, aiming to enhance refined copper production but trade flows may not change.
The U.S. government's proposed limits on scrap copper exports aim to lessen reliance on overseas production, but analysts suggest these measures will have minimal impact. Current export levels are beneath the proposed cap, indicating little change is expected.
Copper is crucial for industries like power generation, artificial intelligence, and electric vehicles. The White House announced a new tariff demanding that 25% of high-quality U.S. copper scrap be retained domestically to boost refined copper production. However, no definition of high-quality was provided, nor was a start date stated, though a Commerce report suggests 2027.
Analysts, including those at Goldman Sachs, argue that trade flows will remain steady, as high-quality scrap is likely already utilized domestically. In 2022, the U.S. exported $4.5 billion in copper scrap, much to China, but exports to China have sharply declined, reducing any potential effect from the new policy.
(With inputs from agencies.)
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