As Trump's tariffs take effect, copper prices in London and Shanghai show divergence [SMM Morning Comment on Copper]

Published: Jul 9, 2025 09:10

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[Trump's tariff implementation approaches, divergence in trends of SHFE and LME copper prices] Macro side, the Trump administration issued a notice on tariff escalation to 14 countries, planning to impose a 25% benchmark tariff on imported goods from Japan and South Korea starting from August 1, apply a tariff rate of 25%-40% on countries such as Malaysia and Indonesia, and impose an additional 10% tariff on BRICS countries that are allies in anti-U.S. policies. Meanwhile, the suspension period for reciprocal tariffs has been extended until the effective date. The uncertainty of this policy has intensified market risk-aversion sentiment, exerting downward pressure on copper prices.

SMM reported on July 9: Overnight, LME copper opened at $9,835/mt, fluctuating considerably in the early session. As the session neared its end, the center of copper prices moved straight up, reaching a high of $9,887.5/mt. After peaking, prices rapidly pulled back to $9,569.5/mt, eventually closing at $9,665/mt, marking a 1.22% decline. Trading volume reached 20,000 lots, and open interest reached 277,000 lots. Overnight, SHFE copper opened at 79,590 yuan/mt, fluctuating downward in the early session to a low of 79,330 yuan/mt. As the session neared its end, copper prices surged straight up, reaching a high of 80,160 yuan/mt, eventually closing at 80,030 yuan/mt, marking a 0.69% increase. Trading volume reached 28,000 lots, and open interest reached 206,000 lots. On the macro front, Trump clarified that a 50% tariff on imported copper would be implemented starting August 1 without any extensions. US Secretary of Commerce Lutnick also indicated that 15 to 20 tariff-related letters would be sent out in the next two days, with the specific implementation time of the tariffs possibly falling between late July and August 1. The resulting high tariffs drove COMEX copper prices to their largest single-day increase since 1968, while LME copper initially rose and then fell. On the fundamental front, due to the arrival of imported copper in the domestic market, the supply in the spot market was relatively loose, while demand declined during the off-season. Overall, although high tariffs drove a significant increase in COMEX copper prices and also boosted SHFE copper prices in the night session, currently LME copper continues to decline, falling to around $9,700/mt, which will drive SHFE copper prices down during the day.

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