Copper futures on COMEX saw an increase of over 3% following President Trump’s directive to investigate copper imports due to national security issues. The US imports approximately 45% of its copper requirements, which has contributed to this upward movement.
The potential for copper tariffs has caused fluctuations in the COMEX/LME arbitrage, recently widening back towards $900 per tonne. Earlier, the arbitrage briefly spiked above $1,000 per tonne after the announcement of tariffs on steel and aluminium imports.
This jump in copper futures reflects traders reacting to possible changes in trade policy. When a country considers tariffs or restrictions on imports, markets often adjust quickly as investors assess supply risks. In this case, concerns over how much copper the US brings in from abroad have pushed the price higher.
The widening COMEX/LME arbitrage means the price gap between the US and London markets is stretching again. When tariffs on steel and aluminium were announced, we saw a rapid increase in this spread. A similar movement has begun taking shape. If traders expect further trade restrictions on copper, this gap could continue expanding as US pricing adjusts separately from global trends.
Supply chains remain a major factor. Roughly half of the copper used in the US is sourced from other countries. If there is an effort to limit imports, domestic supply becomes more important. That naturally lifts the futures price as buyers anticipate tighter availability.
From here, traders will be watching any signs of policy changes closely. If further investigations suggest actual restrictions could be introduced, there may be more price movements. That also means volatility remains a likely feature in the weeks ahead. While the current price rise has been strong, what happens next depends on policy announcements, trade discussions, and how global producers react.
For those trading derivatives, the shifting price relationship between COMEX and LME presents both risk and opportunity. If tariffs come into play, we have seen that they can drive arbitrage spreads quickly in either direction. A rebalancing between the two markets could create short-term moves that wouldn’t typically be as pronounced.
There is also the question of how producers and consumers react. If companies reliant on imported copper start securing more domestic supply in anticipation of restrictions, this could further push up prices. On the other hand, if there is pushback against restrictions, or if investigations do not result in policy changes, we could see some unwinding of the current price movements.
Liquidity conditions will matter as well. Sudden shifts in policy discussions can create short bursts of volatility. If market participants move in quickly, prices can overreact before stabilising again. That makes timing particularly important, as changes in sentiment may not take long to materialise in futures pricing.
For now, traders should be watching developments in Washington closely. If talks of tariffs become more concrete, additional market moves are likely. At the same time, reactions from global producers and consumers will also influence the direction of prices. Each element feeds into the overall picture, and keeping track of these moving pieces will be essential in the coming weeks.
