Copper Trade Becomes Real-Time Gauge for Trump's Tariff Moves
A niche copper trade has evolved into a real-time indicator of US tariff risk as investors await the Trump administration's decision on copper imports.
Copper, widely used in construction, electronics, and transportation, has been on a strong run for over a year, with futures hitting a record high of around $6.90 per pound last week.
Historically, the gap between US Comex copper futures and prices on the London Metal Exchange was used by traders to profit from temporary price discrepancies and hedge exposure between the two markets.
However, Societe Generale analysts say the arbitrage has changed significantly due to the prospect of new Section 232 tariffs on refined copper, with investors increasingly using the Comex copper premium as a gauge of tariff likelihood.
According to ING commodity strategist Ewa Manthey, 'the Comex-LME spread has increasingly become a barometer for US tariff expectations, with a wider premium signalling higher perceived tariff risk and continued metal flows into the US.'