A ‘dazed and confused’ market

New York-based red metals analyst John Gross of “The Copper Journal” and J.E. Gross & Co. Inc., described the state of the global copper market in mid-August as “dazed and confused.”

In his Aug. 15 edition of “The Copper Journal,” Gross summarizes the rise and fall of the sizable difference between the price of copper on the United States-based COMEX terminal market and the London Metal Exchange (LME) in the first seven and a half months of this year, saying the situation has “come full circle to where we were in December” of last year.

At that time, the COMEX cash price for copper was $4.11 per pound, while LME copper was $4.05, for a difference of 6 cents per pound. This compares with an August COMEX price of $4.43 per pound and an LME price of $4.37, for a difference of 6 cents per pound.

In between, however, COMEX copper spent January through July of this year soaring in value as traders and consumers prepared for what they thought would be a considerable tariff placed on inbound shipments of copper cathode into the U.S. by President Donald Trump.

"Although copper held in COMEX warehouses has risen nearly 158,000 metric tons this year, that figure is minor relative to total imports.” – John Gross of J.E. Gross & Co. Inc. and “The Copper Journal”

Instead, at the end of July, the White House announced a tariff regimen that did not include an inbound duty on copper cathode but instead levied the 50 percent duty on semifinished copper products (such as copper pipes, wires, rods, sheets and tubes) and copper-intensive derivative products (such as pipe fittings, cables, connectors and electrical components), effective Aug. 1.

Just before that announcement, the price of COMEX copper had risen to more than $1 per pound greater than its LME counterpart, causing one of the widest price differential, or arbitrage, situations in trading exchange history.

Something a pricing chart doesn’t illustrate is the relocation of inventories held in exchange warehouses and by metals traders that was spurred by the price differential, Gross says.

“Although copper held in COMEX warehouses has risen nearly 158,000 metric tons this year, that figure is minor relative to total imports,” he says, noting that from January through June, 940,000 metric tons of cathodes were imported into the U.S. compared with 540,000 metric tons of imports during all of 2024.

The arbitrage situation likely was a factor in steady trading volumes on the LME copper contract this July.

According to the LME, the 167,501 lots that were traded using its copper contract that month marked a 5.2 percent increase compared with activity in July of last year.

From January through July, the more than 635,000 metric tons of copper traded on the LME outweighed activity for any other metal except aluminum, which saw more than 1 billion metric tons of contract trading activity during the same period.

Copper trading volume on the LME in the first seven months of this year rose by 2.2 percent compared with around 621,300 metric tons of trading from January through July 2024.