"‘Copper tariff’ trading returns, global copper market sees another surge of ‘rushing shipments to the US’"

"‘Copper tariff’ trading returns, global copper market sees another surge of ‘rushing shipments to the US’"

The copper market is repeating last year's script.

On May 27, according to Bloomberg, as expectations for copper import tariffs by the Trump administration heat up again, global copper traders are once again focusing on inventories around the world, racing to ship the metal to the United States. This "tariff arbitrage" trade, which once stirred up a $300 billion annual market, is making a strong comeback.

The price of the near-month contract for copper futures on the New York Commodity Exchange (Comex) is now over $500/ton higher than the spot price on the London Metal Exchange (LME), breaking this level for the first time since last autumn. The widening spread has quickly revived the previously stalled US copper import trade, which had slowed due to narrowing arbitrage opportunities. According to several industry executives, US copper imports may soon rebound to historic highs of 150,000 to 200,000 tons per month.

This round of rush shipments has not only pushed copper prices higher, but is also squeezing supply in other global markets. London copper futures reached $13,746/ton on Wednesday, with an accumulated increase of about 43% over the past year. At the end of January this year, prices even set a historical record above $14,500/ton.

(Weekly chart of London copper futures)

Meanwhile, the US Department of Commerce must submit the latest assessment report on the copper market by June 30, paving the way for tariffs potentially starting in January 2027. This time point is becoming the core trading logic of the market.

Spread widens, arbitrage window reappears

The price difference between Comex and LME is the core engine driving this "rush shipment" trade.

In recent weeks, the Comex near-month contract's premium over the LME spot price has exceeded $500/ton, marking the first time reaching this level since last autumn. Previously, as Comex prices softened, arbitrage opportunities for shipping copper to the US narrowed, and US copper imports noticeably slowed. Now, with the spread widening again, traders are redirecting every available ton of copper to the US market.

Henry Van, Head of Industrial Metals Analysis at Trafigura Group, a commodity trading giant under Glencore, said:

"There's a sense of déjà vu. We're in the same situation as last year—all the copper is being directed to the US. In the near future, imports returning to 200,000 tons per month is completely imaginable."

Last week, Trafigura also acted to withdraw copper worth hundreds of millions of dollars from LME warehouses. According to reports, informed sources said at least part of this move was to capture Comex premium opportunities. This warehouse withdrawal is the largest that LME has seen since 2013.

Tariff expectations are the main driving force

Driving Comex copper prices to outperform LME are both investor optimism about copper fundamentals and strong expectations for Trump administration tariff policies.

The US Department of Commerce must submit a copper market assessment report to Trump by June 30, which could pave the way for copper import tariffs from January 2027. The department previously recommended a 15% tariff on refined copper. This timeline is becoming the key anchor in the market—even though tariffs haven't yet come into effect, just the future expectation is enough to sustain the ongoing flow of copper to the US.

Gerardo Tarricone, Managing Director of Arion Investment Management Ltd. based in London, said:

"We will see a continued flow of copper to the US, which will make the copper story even more compelling."

Once Trump decides to tax refined copper, the market impact will not be limited to the US. Traders noted that large quantities of copper flowing into the US will squeeze LME's available supply. If tariffs take effect early next year, strong shipment incentives will appear in the third and fourth quarters this year, during which LME inventories may decline at a much faster rate.

Global copper market supply tightens

The return of tariff trading, coupled with copper market fundamentals, is creating a multi-faceted bullish resonance.

According to Bloomberg, copper prices reached $13,746/ton in London on Wednesday, rising about 43% over the past year. Demand for power infrastructure driven by the AI boom pushed Comex investors' long positions to the highest since December 2020. Chinese buyers, who had exited the market due to rising prices, also returned after the Spring Festival holiday, further supporting demand.

Supply side pressure is equally notable. Outside the US, copper markets are already in a supply shortage. Nicholas Snowdon, Chief Metals Economist at Mercuria Energy Group, said:

"This shortage focus will likely shift to the LME. It's just a matter of time. If tariffs start early next year, LME inventories will see very strong declines in Q3 and Q4."

However, it is worth noting that despite strong arbitrage motivation, the difficulty of delivering copper to the US is rising, adding new variables to this 'rush shipment' trade, as disruptions related to the Iran war are affecting global shipping and exacerbating congestion at the Panama Canal.

This means that the time required to ship South American copper to major US ports is far longer than usual, and rising shipping costs and periods partially offset arbitrage profits from the spread. This also brings uncertainty to the pace and scale of this "rush shipment."

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