LME Copper to Stay Range-Bound (2017-5-26)

SMM Morning Briefing: Overnight LME copper opened at $13,754.5/mt, dipped to a low of $13,740/mt in early trading, then its center rose to a high of $13,836/mt, subsequently moved sideways and eventually closed at $13,978.5/mt, up 1.3%. Trading volume reached 18,000 lots, and open interest stood at 246,000 lots, a decrease of 342 lots from the previous trading day, reflecting a reduction in bearish positions. Overnight the most-traded SHFE copper 2609 contract opened at 105,370 yuan/mt, dipped to a low of 105,250 yuan/mt early in the session, then its center rose to a high of 105,750 yuan/mt, eventually moved sideways to close at 105,560 yuan/mt, up 0.75%. Trading volume reached 40,000 lots, and open interest stood at 197,000 lots, an increase of 1,132 lots from the previous trading day, reflecting an increase in bullish positions.

The ongoing delay by the White House on potential refined copper import tariffs under President Donald Trump is accelerating structural dislocations across the global physical copper market. Although the statutory timeline for U.S. Commerce Secretary Howard Lutnick to deliver a recommendation has lapsed without a public ruling, the regulatory ambiguity itself has become a primary driver of global trade dynamics. By keeping the tariff threat active, the U.S. has sustained an elevated delivery premium that continues to incentivize aggressive physical inflows into American ports. Over the past 18 months, this mechanism has allowed the country to build a substantial domestic stockpile of a critical metal essential to both green energy transition and advanced technology sectors. However, this deliberate accumulation has come at the direct expense of liquidity in non-U.S. markets. Physical metal is being systematically diverted away from international hubs, driving rapid inventory drawdowns across both London Metal Exchange and Shanghai Futures Exchange warehouses. As regional pricing premiums widen and trade flows skew disproportionately toward the United States, prolonged tariff uncertainty risks transforming temporary arbitrage plays into a permanent, structural fracture in the global copper market.