New York copper traders are paying a record premium over the price in London to buy the industrial metal, as they try to secure supply ahead of possible US tariffs.
The gap between the benchmark New York Comex futures price and the London Metal Exchange price widened to more than $1,160 per tonne this week, surpassing its February high point of about $1,149 — a new record, according to Refinitiv data that goes back to 2020.
US President Donald Trump last month ordered a probe into “the threat to national security from imports of copper”, which could result in tariffs being imposed on the metal. Levies of 25 per cent have already been introduced on all aluminium and steel imports.
“Traders [are] rushing to deliver metal into the US,” said John Meyer, an analyst at corporate advisory firm SP Angel. This factor is pushing up the difference in price between the two markets.
Copper is used in many industries including technology, construction and renewable energy.
If 25 per cent tariffs were to be imposed on copper imports, then the gap between US and London prices could widen to more than $2,000, said Natalie Scott-Gray, an analyst at StoneX.
Copper is stored in US Comex warehouses on a so-called “duty paid” basis, meaning any taxes and levies on the metal must have been settled. As a result, copper in those facilities would not be hit with additional tariffs.
Stocks in Comex warehouses rose to close to their highest level since 2019 in February, although they have edged down since. Meanwhile, the red metal has been flowing out of the warehouse network managed by the London Metal Exchange.
Although the destination of metal leaving LME warehouses is not public, US trade data indicates an uptick in copper imports to the US, according to BMO analysts. US metal imports in January had been “more selective and focused on immediately at-risk commodities such as copper and aluminium”, they said.
Higher US prices that were incentivising copper deliveries to the US, and shipments out of the LME network, were “tightening” supply in the market, said Alastair Munro, a strategist at Marex.
A rush to get hold of base metals has already caused dislocations in the market, driving up the regional US prices of aluminium and copper, for example.
Some analysts are forecasting that the price of London copper — which on Wednesday hit more than $9,900 per tonne, a five-month high — will break through $10,000 per tonne as imports to the US accelerate.
Copper could “easily” break through that level as a result of tariffs and the “substantial and growing shortage of copper concentrates” in the context of rising demand, said Meyer.
Rising copper prices were also driven by an expected increase in demand following the approval of Germany’s massive military and infrastructure spending plan, Chinese stimulus measures and some investors diversifying from US tech stocks into gold and industrial metals, said Munro.
Copper was “facing impending supply squeeze in the next year or so”, he added.
In addition to the tariff threat, the copper market is having to contend with exceptionally low processing fees. This has raised concerns about the long-term prospects for some smelters, which turn mined ore into the finished metal.
Depressed fees are the result of an oversupply of smelting capacity: China has rapidly built out its fleet of the facilities, that other global copper smelters are struggling to compete with.
Commodity trader Glencore this month said it would halt operations at its copper smelter in the Philippines, citing “increasingly challenging market conditions” as the fees that smelters charge for processing the metal fell to an all-time low.
