METALS-Copper falls outside US after Trump's 50% tariff plan catches traders off guard

By Hongmei Li and Lewis Jackson

SINGAPORE, July 9 (Reuters) - Copper prices on the London Metal Exchange and the Shanghai Futures Exchange slipped on Wednesday as a potential U.S. copper tariff signalled an end to a months-long arbitrage trade that had drawn the metal from global markets.

U.S. President Donald Trump said on Tuesday he would announce a 50% tariff on the metal, sending COMEX copper futures up more than 12% to a record high.

U.S. Commerce Secretary Howard Lutnick said shortly afterwards that the tariff would likely be in place by the end of July or August 1.

The three-month copper contract on the LME CMCU3 slipped 1.35% to $9,658 per metric ton by 0700 GMT, and the most-traded copper contract on the SHFE SCFcv1 fell 1.36% to 78,400 yuan ($10,920.28) a ton.

"The announcement is like a loud thunder in the middle of the night, very sudden, and a 50% tariff is much higher than the expected 25%," said a Beijing-based metals analyst, who is not authorised to speak to the media.

Traders have shipped copper out of warehouses around the world to the U.S. in anticipation of the higher prices since the country announced an investigation into imports of the red metal in February, raising COMEX inventories to their highest level since 2018.

Such trades are now numbered given how little time is left to move copper, potentially freeing up supply outside the U.S.

"There is almost nobody in Asia buying copper for delivery to the U.S. right now," said Michael Wu, a copper analyst at Shanghai Metals Market, adding that shipments from Latin America are likely the only ones able to make the deadline.

The tariffs will be bearish for LME prices, according to ING, which said that once implemented, U.S. buyers are likely to start using their inventories.

Goldman Sachs said "as with previous tariffs, this higher initial tariff rate could be used as a negotiating anchor, followed by concessions or exemptions".

LME tin CMSN3 fell 0.68% to $33,170 a ton, lead CMPB3 down 0.39% to $2,048.5, nickel CMNI3 slipped 0.35% to $14,990, and zinc CMZN3 eased 0.15% at $2,716.5, while aluminium was flat at $2,584.5.

SHFE nickel SNIcv1 fell 1.2% to 119,140 yuan a ton, and tin SSNcv1 eased 0.51% to 262,890 yuan, while zinc SZNcv1 gained 0.52% to 22,120 yuan, lead SPBcv1 rose 0.35% to 17,175 yuan, and aluminium SAFcv1 inched up 0.1% to 20,515 yuan.

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