Copper Tariff Boosts U.S. Supply Chain, Prysmian Sees 50% Gain

The global largest copper cable manufacturers have welcomed the 50% copper tariff planned by the , stating that this measure will help strengthen the U.S. supply chain, although the cost will be borne by the customers. The Italian company Prysmian SpA invested over 400 million last year to acquire Encore Wire Corp., a Texas-based company. This acquisition is part of Prysmian's strategy to expand its presence in the U.S. market and strengthen its supply chain.

The tariff, which is set to take effect on August 1, has caused significant disruption in the metal market, adding to the volatility of the industrial commodity market. Since February, when the first suggested the possibility of a copper tariff, global traders have rushed to ship record amounts of copper to the U.S. to beat the deadline. Prysmian, along with other industry players, is awaiting more details on the tariff, but expects it to apply to both semi-finished products like cables and raw copper.

Prysmian operates a large factory on the outskirts of Dallas, with an annual production capacity of approximately 220,000 tons of copper cables. The company believes that the tariff will further solidify the leadership position of local enterprises, as it has a larger proportion of copper sourced from the U.S. and its business is vertically integrated. This puts Prysmian in a more advantageous position compared to its competitors.

However, opinions within the industry are divided. Some argue that achieving meaningful growth in U.S. copper production will take years and require additional incentives, as building and operating mines and factories in the U.S. is costly and challenging. Domestic producers like Freeport-McMoRan may benefit from the price premium of U.S.-produced copper. Analysts warn that ultimately, consumers will bear the cost.

Currently, U.S. copper prices have surged due to tariff expectations. Prysmian has so far been able to pass on the increased costs to customers, although the strength of future demand remains to be seen. In some applications, aluminum may eventually replace copper. Prysmian has not yet started replacing copper imports from Latin America, but logically, this could be supplied by refined scrap copper in the future, similar to the company's existing cooperation with the German copper processor Aurubis AG.

Since its spin-off from tire manufacturer Pirelli in 2005, Prysmian has consistently expanded through acquisitions. Last year, the company acquired Encore Wire to strengthen its position in the low-voltage electrical applications sector, which is crucial for data centers. Prysmian sees cables as a key component of the ongoing electrification and digitalization process, positioning itself as a leader in the industry.