Prysmian's Copper Play: A Strategic Edge in Tariff Turbulence

The U.S. copper tariffs announced in July 2025—a 50% levy on imports—have upended global supply chains, but one company stands to gain: Prysmian Group. The world's largest cable maker has positioned itself to capitalize on the policy shift through vertical integration, domestic sourcing, and strategic acquisitions. Analysts at Citi have labeled it a “relative tariff winner,” a title justified by its ability to weather the storm while competitors flounder. Here's why investors should take note.

The Tariff's Dual Impact: Cost Pressures and Competitive Gaps

The 50% tariff, effective August 1, has sent U.S. copper prices soaring to record highs. The COMEX-LME premium for U.S.-bound copper hit $2,600 per ton by August, a 25% jump from early 2025. For companies reliant on imported copper, this means inflated input costs. But Prysmian avoids this trap entirely: 90% of its U.S. copper supply comes domestically, sourced from Arizona's Freeport mine and processed at its Texas-based mill. This vertical integration shields it from tariffs while enabling price hikes for customers—margins in its U.S. low-voltage business are expected to expand by 150 basis points in 2025.

Encore Wire: A $4.2B Bet on Vertical Dominance

Prysmian's 2024 acquisition of Texas-based Encore Wire—its largest U.S. deal to date—was a masterstroke. Encore's expertise in low-voltage cables and strong U.S. distribution network align perfectly with Prysmian's strategy. The combined entity now controls 25% of the U.S. cable market, far outpacing competitors like Southwire and General Cable. Encore's proximity to Texas' copper mills and access to Freeport's Arizona reserves further entrench Prysmian's domestic advantage. Analysts at Citi estimate the deal adds €0.50 per share to earnings by 2026, as synergies in procurement and logistics take hold.

The Infrastructure Tailwind

Prysmian's alignment with U.S. energy and tech infrastructure goals amplifies its appeal. The Biden administration's push to modernize power grids and expand data centers—critical for AI and EV adoption—requires massive copper consumption. Prysmian's cables are already embedded in projects like the Texas Gulf Coast Energy Hub and California's Grid Resiliency Program. With tariffs incentivizing domestic production, Prysmian's vertically integrated model ensures it remains the go-to supplier for projects tied to federal spending.

The Risks, and Why They're Manageable

Critics point to inflationary pressures and demand destruction in copper-heavy sectors like construction. Indeed, U.S. copper demand is projected to fall 16% in 2025 as price spikes bite. Yet Prysmian's focus on infrastructure—where costs are often subsidized or deferred—buffers it from consumer-driven sectors. The company also benefits from long-term contracts with utilities, which often include price pass-through clauses. Even if exemptions for Canadian or Chilean imports emerge, Prysmian's scale and integration keep it insulated.

Investment Thesis: Buy the Tariff Winner

Prysmian's shares have risen 3.9% since the tariff announcement, but the stock remains undervalued. At a 9.5x 2025 EV/EBITDA multiple, it trades at a 20% discount to its European peers. With margins set to expand and infrastructure spending accelerating, a rerating to 11x is plausible, implying a 16% upside. Citi's “Buy” rating and price target of €28 (vs. current €24.50) underscore the case for immediate investment.

The copper tariff era is a defining moment for U.S. manufacturing reshoring. Prysmian, with its ironclad supply chain and infrastructure mandate, is not just surviving—it's thriving. This isn't just a trade policy play; it's a structural shift favoring the vertically integrated. Investors should act now, before the market fully prices in Prysmian's advantage.