Trump, tariffs and tin - LME metals in seven charts: Andy Home

LONDON, April 4 (Reuters) - U.S. President Donald Trump's tariff blitz has shocked financial markets, but the LME base metals complex got an early preview of the likely mayhem.

The imposition of 25% tariffs on U.S. imports of aluminium has dislocated the light metal's global supply chain, while the threat of similar levies on copper has generated an unprecedented disconnect in transatlantic pricing.

Micro tariff turbulence is now overlaid with macro tariff turmoil as markets take fright at the risk of a full-blown trade war. The London Metal Exchange's index of base metals (.LMEX), opens new tab has slumped 6% this week as reciprocal tariffs moved from threat to reality.

Only one metal has escaped the tariff tsunami. Tin continues to out-perform the rest of the LME pack buoyed by its own supply chain chaos.

SUPPLY SHOCKS ROCK TIN

LME three-month tin gained 25% over the first quarter of 2025, eclipsing even gold's stellar run.

A series of supply shocks has generated a roller-coaster ride for tin traders.

The market sold off on news the giant Man Maw tin mine in Myanmar would restart after an 18-month absence before rebounding when Alphamin Resources (AFM.V), opens new tab announced it was closing its Bisie mine in the Congo due to the escalating insurgency in the east of the country.

The devastating earthquake in Myanmar, throwing fresh doubt on Man Maw's return, has propelled tin even higher.

Investors have rushed to join the action. Fund long positioning has hit record levels.

LME stocks are sliding and time-spreads tightening, adding to the volatility mix.

Bulls, however, should note that there is no shortage of tin in China. Shanghai Futures Exchange stocks have risen by 47% so far this year and at 9,872 metric tons are the highest since September.

MINDING THE COPPER GAP

Copper trading has been defined by the threat of U.S. tariffs since February, when Trump ordered a national security investigation into copper imports.

The trade has played out in the arbitrage between the CME U.S. customs-cleared price and the LME global price . It has been a volatile trade as the market tries to second-guess when copper tariffs will come and at what rate.

The record CME premium over LME copper has triggered a mass movement of physical metal to the United States. How much makes it through U.S. customs before tariffs are announced remains to be seen.

Record high CME prices and physical market dislocation initially rekindled bull spirits but LME copper has just slumped below the $9,000-per ton level as concern grows over the negative implications of U.S. reciprocal tariffs for global manufacturing activity.

ALUMINIUM PREMIUM ACTION

The CME aluminium contract mirrors the LME's international product, meaning the tariff trade has played out in regional premiums.

The U.S. Midwest premium widened to more than $900 per ton over the LME basis price last month as the market priced in the lift in U.S. import tariffs from 10% to 25%.

European premiums, by contrast, have fallen sharply, suggesting physical metal is already being diverted from the U.S. market.

Analysts had high expectations for aluminium at the start of the year but the market has generated mixed signals and, like copper, is selling off in reciprocal tariff reaction

NICKEL AWAITS INDONESIA

Nickel has spent the first three months of 2025 trapped in a broad $15,000-17,000-per ton range.

The price has been weighed down by ever-rising LME stocks as over-production in Indonesia swamps the refined nickel supply chain.

The amount of Chinese nickel in the LME warehouse network has grown to more than 50% from 11% at the start of 2024. This is metal that has been processed in China from Indonesian raw materials. Indonesia has started producing its own refined metal, which is also turning up in LME sheds.

The nickel price is so low that even Indonesian operators are feeling the margin pinch, but until the country limits its production growth, nickel will remain over-supplied.

The only question is whether the Indonesian flood continues to wash into the refined metal segment of the nickel market or revert to the lower-grade Class II segment.

It all depends on Indonesian processing margins.

HEAVY STOCKS WEIGH ON HEAVY METAL

And talking of high stocks.

Someone cancelled 120,000 tons of LME lead stocks last month but there was little or no reaction from either outright price or time-spreads.

No-one thinks the physical market is short by that much metal. Rather, lead is seeing the sort of LME warehouse arbitrage that comes with over-supply and elevated exchange stocks, which have grown to 331,000 tons from 21,500 tons at the start of 2023.

The lead price has held up well given the inventory overhang but that may be because it is still in better shape than sister metal zinc.

ZINC MINE REBOUND

Zinc has consistently underperformed the rest of the LME pack since the start of the year, even though exchange stocks have fallen steadily.

But the market appears to be trading zinc's bearish raw materials narrative rather than its more nuanced refined metal dynamics.

Mined zinc production fell by 2.8% year-on-year in 2024, tightening the raw materials supply chain to the point that smelter fees turned negative in the second half of the year.

Restarts and new mines are expected to generate a significant rebound in 2025.

There are signs that this new wave of mine supply is starting to build momentum. Smelter treatment charges, which turned negative due to a shortage of mined concentrates in 2024, have bounced back to $35 per ton on a spot basis.

Zinc demand flat-lined last year and with little prospect of a recovery in global construction, a major end-use sector for zinc, higher mined output is expected to generate over-supply in the refined metal market.