Traders who have been incurring high costs to transport copper to the United States before President Donald Trump enforces import tariffs on the metal are now engaged in a competitive rush to deliver shipments promptly. This heightened urgency follows recent reports by Bloomberg indicating that the US administration plans to swiftly implement tariffs sooner than the widely expected timeline of several months, drastically altering the global copper market.
Since Trump's initial discussions about imposing tariffs on imported copper in January, the market dynamics have seen significant fluctuations. Futures contracts on New York's Comex exchange reached unprecedented levels on Wednesday, while benchmark prices on the London Metal Exchange faced considerable disparities compared to those in the US. This disparity has led traders to potentially profit by purchasing more affordable international copper and rushing shipments to the US before tariffs take effect.
However, the looming risk for traders is substantial losses if their copper deliveries reach US ports post-tariff enforcement. With the accelerated tariff implementation timeline disrupting previously held market assumptions, traders now have limited time to ship copper from distant regions like Latin America, Africa, and Asia.
The heightened demand for copper has caused traders to offer premiums of up to $500 per ton above LME prices to secure copper for delivery onto the Comex, a stark increase from the usual $100 premiums. The discrepancy between LME and Comex prices, with LME prices significantly lower, has prompted traders to pay premiums to acquire the metal in recent weeks.
As of Thursday, copper futures in New York were trading slightly higher at $5.2685 per pound, nearing record levels, while on the LME, the metal increased to $9,978 per ton. Amidst an industry known for slim profit margins, the lucrative trading potential presented by the impending tariffs has been described by Kostas Bintas, the prominent head of metals trading at Mercuria Energy Group Ltd., as the most profitable opportunity he has ever encountered.