Core Viewpoint - Copper traders are competing for storage space, betting that Trump's unexpected decision to exempt refined copper from tariffs will lead to a significant influx of copper into the London Metal Exchange (LME) warehouses [2] Group 1: Market Dynamics - The recent announcement by Trump to impose a 50% import tariff only on processed copper while exempting refined copper has dramatically altered the copper market, ending what industry veterans described as "the most profitable arbitrage trade of their careers" [2][3] - Traders have accumulated over $5 billion worth of copper inventory in U.S. ports, particularly in New Orleans, which has become the largest copper inventory location globally [2] - Following the tariff announcement, U.S. copper prices plummeted over 20% within minutes, while LME prices also saw a decline of 0.9% [3] Group 2: Storage and Logistics - All available LME warehouse capacity in New Orleans was fully booked by traders as of Thursday afternoon, with some storage companies unable to accept more copper for at least three months [3] - Traders are now considering selling copper originally intended for the U.S. market to European and Asian buyers due to the collapse of U.S. copper premiums [3] - The sudden influx of copper into LME will reverse the previous supply tightness experienced just a month ago, prompting a reevaluation of copper price prospects [3] Group 3: Trading Strategies - The decision to impose tariffs has led to a significant shift in trading strategies, with traders weighing the profitability of delivering copper to specific warehouses versus end-users [4] - Many traders are facing logistical challenges, having shipped copper to locations like California and Hawaii, where there are few buyers and no exchange warehouses [5] - The cost of transferring copper between U.S. warehouses is substantial, with estimates around $50 per ton, making re-exporting less attractive [5] Group 4: Investor Sentiment - Despite the turmoil, most traders maintain a positive long-term outlook for copper, although the recent price drop has caused distress among financial investors who had bet on rising copper prices [6] - The chaos in the copper market may lead to forced liquidations due to significant mark-to-market losses, potentially resulting in one of the largest capital outflows on record [6] Group 5: Future Outlook - Traders are shifting their focus away from Trump and are now looking towards major copper-consuming countries like China, indicating a return to a more normalized market state [7] - The binary risk associated with tariffs has diminished, allowing traders to re-engage in the market [8]