US Copper Premium Collapses as White House Tariff Plans Stall

The significant premium for delivering copper into the United States has collapsed following reports that the White House is stalling plans to impose import tariffs. The news triggered a sharp sell-off in copper futures on Thursday, unwinding a lucrative arbitrage trade that has dominated the market for months.

Market Reacts to Tariff Uncertainty

According to reports, the White House is taking a cautious approach to the proposed tariffs due to concerns that they could inflate costs for domestic manufacturers. This potential economic headwind is seen as possibly outweighing the intended benefits for the U.S. mining sector.

The market reacted swiftly to the development. The benchmark three-month copper contract on the London Metal Exchange (LME) fell 3% to $14,329.50 per metric ton after previously hitting a record high of $14,875. On the U.S. COMEX exchange, copper prices dropped 4.7% to $6.49 per pound.

Ad

Arbitrage Window Slams Shut

For months, COMEX copper has traded at a substantial premium to LME prices. This price gap incentivized traders to ship large volumes of the industrial metal to the U.S. ahead of a potential 15% tariff that could have been implemented as early as 2027. The investigation into the duties was first ordered by President Donald Trump in February of last year.

That premium evaporated on Thursday. The spread between the October-delivery COMEX and LME copper contracts plunged by approximately $200 per metric ton, briefly turning negative. The spread was last quoted at a discount of $20 per metric ton, a level that makes it economically unprofitable to ship copper to the United States and signals that traders are rapidly pricing out the risk of near-term tariffs.