Copper Price Gaps: Unpacking the COMEX-LME Spread

The price of copper on the COMEX exchange in New York is often higher than its counterpart on the LME exchange in London, which may seem counterintuitive since both contracts settle against high-grade copper.

The discrepancy arises from the different contract structures and delivery networks used by the two exchanges. The COMEX uses listed futures months, while the LME employs a prompt-date structure with daily, weekly, and monthly delivery dates.

To compare prices accurately, one must convert them into the same unit and match contracts with similar delivery periods. Additionally, copper available for COMEX delivery may be more valuable than copper available elsewhere, leading to a premium in the U.S. market.