Tariff-Driven Arbitrage Reshapes Copper Price Spread

The COMEX-LME copper price spread has undergone significant changes due to tariff-driven arbitrage, according to an analysis by Societe Generale. The bank's report highlights how import tariffs in the United States have created a persistent price gap between the two major copper benchmarks.

The introduction of a 25% tariff on copper imports under Section 232 in the U.S. has made COMEX copper more expensive relative to LME copper, creating an arbitrage opportunity for traders to ship metal into the U.S. to capture the higher price.

Societe Generale notes that this arbitrage is not a short-term phenomenon and is likely to persist as long as tariffs remain in place. The spread has widened significantly since the tariff announcement, and the bank expects it to remain elevated, reflecting the structural change in the market.