The acute copper supply squeeze that drove prices higher in the US is coming to an end as President Trump’s plan to impose a 50 per cent tariff on the metal nears implementation. Key spreads on the London Metal Exchange (LME), which surged in late June due to increased shipments to the US, have now collapsed. The White House’s indication that the levy is imminent means the opportunity to profit from arbitrage is diminishing rapidly, as shipments from Europe and Asia take weeks to reach the US and could arrive after tariffs are imposed.
Spot copper on the LME has traded lower than three-month futures for the first time in over a month, signalling a rapid decline in demand within the exchange’s warehousing network. A crucial one-day spread has also experienced a sharp decline. On Wednesday, New York-traded copper futures fell by 2.4 per cent late in the trading day.
For months, copper has been flowing into the US as traders sought to capitalise on higher prices in New York by purchasing the metal elsewhere. The implementation of tariffs will eliminate this arbitrage opportunity, consequently reducing demand for spot copper in Europe and Asia. This shift marks a significant change in the dynamics of the global copper market, reversing the trends observed in recent months.
