Investors are using the price spread between U.S. COMEX and London Metal Exchange copper futures to gauge the likelihood of future U.S. tariffs on refined copper imports.
Key facts
- •Copper futures reached a record high of nearly $6.90 per pound last week.
- •The U.S. currently imposes a 50% levy on imports of semi-finished copper products.
- •Societe Generale analysts estimate a 37% probability of a 30% tariff on refined copper by January 2028.
- •U.S. copper imports in July exceeded 200,000 metric tons, the highest level in 12 years.
- •StoneX strategist Natalie Scott-Gray identified the pending Section 232 decision as the copper market's biggest catalyst.
A specialized arbitrage trade involving copper futures has become a real-time indicator for potential U.S. tariff policy. Analysts are monitoring the premium between U.S. COMEX and London Metal Exchange prices to assess the market's expectation of new Section 232 tariffs on refined copper, which are currently under investigation by the White House.
By the numbers
Market implications of potential tariffs
The U.S. Commerce Department has proposed a phased tariff strategy for refined copper, suggesting a 15% levy starting January 1, 2027, which would increase to 30% on January 1, 2028. Societe Generale analysts have modeled the cost of shipping LME-grade copper to the U.S. to estimate the probability of these duties. Their current data suggests a 14.6% likelihood of the 15% tariff by 2027 and a 37% probability of the 30% duty by 2028.
Drivers of copper demand and supply
U.S. policymakers have expressed concern regarding the country's reliance on imported refined copper, citing increased demand from AI infrastructure, defense spending, and grid modernization. In July, the U.S. imported over 200,000 metric tons of copper, marking a 12-year high. Analysts note that while the COMEX premium supports copper prices in the near term, ongoing uncertainty regarding tariff decisions is expected to keep market volatility elevated.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by CNBC Europe.
