- Macroeconomics | Global Markets | Energy/Commodities
- The three-month copper contract on the London Metal Exchange rose 0.71% to $13,692 per ton in volatile trading on Monday, as the market cautiously digested the progress of the first round of US-Iran peace talks held in Switzerland over the weekend and geopolitical changes.
- Global commodity traders are closely watching the copper tariff review and recommendations expected to be released by US Commerce Secretary Lutnick by the end of June. The uncertainty of tariff policies is accelerating the structural cross-regional flow of global base metal inventories.
Affected by tariff expectations, metals from European and Asian warehouses have recently continued to flow to the United States. The latest copper inventory in registered warehouses of the London Metal Exchange decreased by 3,575 tons to 352,150 tons, with the proportion of canceled warrants reaching 37%.
Geopolitical Situations Lead to Market Caution
The first round of high-level peace talks between the US and Iran held in Switzerland over the weekend concluded on Monday, but mediators revealed that the talks did not start smoothly. US President Trump threatened to resume attacks, while Tehran claimed to have blocked the Strait of Hormuz again over the weekend. David Wilson, head of basic metals strategy at BNP Paribas, stated that the complexity of the geopolitical situation has put the market in a wait-and-see mode, with investors assessing the actual risk of damage to Middle Eastern supply routes and the potential macroeconomic ripple effects.
Impending Tariff Review Triggers Cross-Regional Inventory Flow
Another core focus of the market is the upcoming copper tariff review results to be released by the US Department of Commerce at the end of this month. Concerns over potential tariff barriers have intensified, opening a commodity logistics arbitrage window, prompting a large amount of metal to flow from European and Asian exchange warehouses to US warehouses. The latest data from the London Metal Exchange shows that its global registered warehouse copper inventory has decreased by nearly 1%, while the proportion of canceled warrants is as high as 37%, indicating that more inventory is likely to be withdrawn and transferred. In contrast, copper inventory in warehouses monitored by the Shanghai Futures Exchange also saw a significant decline of 23.6% previously.
Spot Market Premiums and Divergence in Bullish Sentiment
Driven by the aforementioned dual factors, there has been a certain degree of divergence in the trends of domestic and foreign base metals. Although the main copper contract on the Shanghai Futures Exchange fell slightly by 0.08% to 104,890 yuan per ton, London copper maintained its upward trend supported by external spot tightness and geopolitical premiums. Other base metals were also mostly boosted, with tin and nickel futures on the London Metal Exchange rising by 3.08% and 1.65%, respectively, showing the market's bullish pricing preference for potential supply-side disruptions. If the tariff policy at the end of this month exceeds expectations or the Middle East situation further deteriorates, the pricing logic of the global metal supply chain may face reassessment.
