Copper Prices Surge as Tariff Arbitrage Triggers LME Copper Short Squeeze [SMM Copper Morning Meeting Summary]

Tuesday, September 8, 2026

Futures: Overnight LME copper opened at $14,428/mt, initially consolidated sideways with the center edging down to $14,415.5/mt, then rose all the way to $14,533/mt, and finally closed at $14,494/mt, up 0.8%. Trading volume reached 15,000 lots, and open interest stood at 266,000 lots, up 242 lots from the previous trading day, reflecting bullish positioning. Overnight, the most-traded SHFE copper 2610 contract opened at 109,540 yuan/mt, hit a low of 109,320 yuan/mt at the open, then climbed all the way to a high of 110,240 yuan/mt, and finally closed at 109,890 yuan/mt, up 0.62%. Trading volume reached 41,700 lots, and open interest stood at 223,000 lots, up 8,468 lots from the previous trading day, reflecting bullish positioning.

[SMM Copper Morning Meeting Summary] News: (1) On September 7, data from the People's Bank of China showed that as of end-August 2026, China's gold reserves rose to 76.73 million ounces, up 650,000 ounces from end-July, marking the 22nd consecutive month of increases. Notably, July saw a monthly increase of 640,000 ounces, higher than June's 480,000 ounces, indicating a further acceleration in gold purchases; August's increase further rose to 650,000 ounces, sustaining the high-level buying trend.

(2) Amid rising political uncertainty, the German government bond market saw heavy selling, with the two-year German bund yield briefly rising to 3% on Monday, and the ten-year bund yield briefly reaching 3.3863% intraday. In terms of news, in the state parliament election in Saxony-Anhalt in eastern Germany, the far-right Alternative for Germany (AfD) won with 43.8% of the vote, doubling its vote share from five years ago. Many media outlets described the AfD's victory as a "political earthquake" in Germany.

Spot: (1) Shanghai: On September 7, SMM #1 copper cathode spot prices against the SHFE copper 2609 contract were quoted at premiums of 150-300 yuan/mt, with an average of 225 yuan/mt, down 65 yuan/mt from the previous trading day. Looking ahead, downstream orders remain weak, and end-user purchase willingness is low. Yesterday, buying sentiment in Shanghai pulled back notably, with the market still dominated by need-based purchases. Overall, given weak downstream demand, insufficient purchase willingness, and suppliers lowering prices to sell, spot prices against the SHFE copper 2609 contract are expected to face slight downward pressure tomorrow; however, as the premium center continues to pull back, some low-priced cargoes may gradually attract need-based buying, and further downside is expected to be relatively limited.

(2) Guangdong: On September 7, Guangdong #1 copper cathode spot prices against the front-month contract: high-quality copper was quoted at a premium of 280 yuan/mt, down 60 yuan/mt from the previous trading day; standard-quality copper was quoted at a premium of 200 yuan/mt, down 40 yuan/mt from the previous trading day; SX-EW copper was quoted at a premium of 140 yuan/mt, down 40 yuan/mt from the previous trading day. Overall, increased arrivals pushed spot premiums lower, trading improved, and market participants continue to monitor future arrivals.

(3) Imported copper: On September 7, the average warrant price was flat from the previous trading day at $72/mt (price range: $66-78/mt); the average B/L price was flat from the previous trading day at $75/mt (price range: $70-80/mt); the average EQ copper (CIF B/L) price was flat from the previous trading day at $55/mt (price range: $50-60/mt), with quotes referencing September-arrival cargoes. Today, the SHFE/LME price ratio weakened, and the backwardation structure between September and October dates narrowed. Suppliers said they are temporarily taking a wait-and-see stance, with upstream and downstream continuing to game each other, and market activity remained low.

(4) Secondary copper: On September 7 at 11:30, the futures closing price was 109,630 yuan/mt, up 30 yuan/mt from the previous trading day. The average spot premium was 225 yuan/mt, down 65 yuan/mt WoW from the previous trading day. Today, secondary copper raw material prices remained flat MoM. The secondary copper raw material sales sentiment index was flat at 2.82, and the purchase sentiment index was flat at 1.80. The price difference between copper cathode and copper scrap was 3,577 yuan/mt, up 30 yuan/mt MoM. The price difference between copper cathode rod and secondary copper rod was 1,680 yuan/mt. According to SMM survey, with copper prices consolidating at highs, secondary copper rod enterprises maintained normal purchases, while secondary copper raw material traders believe that copper prices face significant resistance to break above 110,000 yuan again in the near term and will sell into strength, so secondary copper raw material supply is relatively ample in the short term.

Prices: On the macro front, the US dollar index pulled back amid a stronger yen, providing bullish support for copper prices. Meanwhile, geopolitical risks resurfaced as Saudi Aramco's oil facilities were attacked, raising market uncertainty. On the fundamentals side, supply arrivals of imported and domestic cargoes were relatively stable, with the overall tight supply pattern persisting; on the demand side, high copper prices continued to suppress end-use consumption, with downstream purchases mainly need-based. On inventories, as of Monday, September 7, SMM copper inventories in major Chinese markets fell 17,000 mt WoW from the previous Monday to 85,100 mt. Total inventories were 61,800 mt lower than the 146,900 mt in the same period last year. The continued inventory drawdown further reinforced market concerns over tight supply outside the US, providing strong bullish support for copper prices. Overall, copper prices are expected to consolidate on a strong note today.

[Data source statement: Except for publicly available information, all other data are processed by SMM based on public information, market communication, and SMM's internal database models, and are for reference only and do not constitute decision-making advice.]