The copper arbitrage trade is one for the record books but it is winding down.
When Trump put 50 percent tariffs on copper, he created a massive opportunity for traders capable of getting copper from overseas to the US in time to beat tariffs.
The charts below show what happened to prices in US dollars. But LME futures are in metric tons while CME futures are priced in pounds.
I convert tons to pounds and show the arbitrage opportunity.
LME Copper Price Per Metric Ton
LME Copper Price Per Pound
The Comex CME exchange in the US prices copper in pounds.
1 metric ton = 2,204.62 pounds
To convert the price per metric ton to price per pound one divides by 2,204.62.
LME vs CME Copper Price Per Pound Detail
On July 7 you could buy LME copper at ~4.4380 and sell copper at ~5.6855 for an amazing arbitrage.
The peak spread was about 28 percent.
That’s not all profit because you had shipping costs to get copper from wherever to the US by Trump’s August 1, tariff date.
Currently that rules out Asia but there is a diminishing play from South America. Some acted on Trump’s threats in advance.
Once-in-a-Generation Copper Trade Upends a $250 Billion Market
Bloomberg explains how a Once-in-a-Generation Copper Trade Upends a $250 Billion Market
The phone calls started within days. In late February, President Donald Trump ordered a probe to potentially tariff copper imports. Almost immediately, China’s top metals bosses began receiving inquiries from some of the biggest Western commodity traders — companies that for decades have played a key role in supplying metal to feed the factories, construction sites and power grids of the world’s top consumer of raw materials.
But now instead of selling copper to China, the traders wanted to buy from it. Lots of copper, as soon as possible. They were willing to pay big money to get it. They even offered to pay their Chinese customers sizable amounts if they would cancel their obligations to supply them, freeing up that copper too.
On the morning of Feb. 28, the containership President Reagan departed Shanghai, carrying 716 tons of copper owned by Hartree Partners LP that was destined for Los Angeles. It was one of the first in a series of trades that left industry veterans stunned, as containers stacked with heavy slabs of copper that had just traveled halfway around the world, from smelters in Chile’s Andes mountains to China’s east coast, were hurriedly sent back across the Pacific toward ports in the US. Some cargoes hadn’t even been unloaded yet before the order was given to ship out again.
And the traders were only getting started. Trump’s probe fired the starting gun on a massive movement of metal that has redrawn the global market, as surging US prices made it hugely profitable to ship copper into the country — at least until the tariffs arrive. Some traders describe deals yielding more than $1,000 on every ton of copper, an unprecedented sum in an industry where a good trade rarely nets $100.
David Lilley, a 30-year industry veteran whose career spans physical trading, hedge-fund investing and management of US copper processing plants, said that he’s never seen anything like it.
“It was the best physical trading opportunity I have seen,” said Lilley, who now runs specialist metals hedge fund Drakewood Capital Management and no longer trades in physical markets. “A number of merchants captured it very effectively.”
The arbitrage trade has sucked hundreds of thousands of tons into US ports, some of which is now piling up outdoors on wharves along the Gulf Coast as traders hunt for space in bulging warehouses. New Orleans, the industry’s main storage hub for copper in the US, has become the focal point of the entire global market, leaving China and the rest of the world dangerously short of inventory. The London Metal Exchange’s copper contract spent most of last month gripped by a mounting supply squeeze.
Now, the endgame is approaching, after Trump said this week he will impose 50% tariffs on copper imports starting from Aug. 1. The news sent US prices spiking again and ratcheted up the stakes for any traders still trying to rush metal across US borders — especially those who paid big premiums to get hold of supplies in a bet that the eventual profits would be even bigger. If they can beat the tariffs.
Top Copper Importers
Amazing Surge of Copper
Copper has poured into ports across the US, but New Orleans and Florida’s Panama City have drawn the biggest volumes — the former due to its proximity to Comex warehouses, and the latter for its ready access to manufacturers. Metal has flooded into New Orleans in such huge volumes that copper is piling up on wharves surrounding the city.
More than 230,000 tons of copper have been shipped into each port this year, and in New Orleans more than 90,000 tons of that has gone straight into Comex warehouses. The surge means that the Louisiana port, better known as the birthplace of jazz, now holds more exchange-listed metal than Shanghai, Rotterdam, Singapore and Taiwan combined.
There’s still some space to fill in New Orleans warehouses, but they’re getting increasingly close to capacity, according to people familiar with the situation who asked not to be identified.
At Panama City, port director Alex King has been working in the port industry for 14 years, but he’s never seen anything like the huge volumes of copper hitting docking berths over the past few months.
Winners and Losers
The immediate winners are clear: The commodity traders, miners and banks that have been able to ship copper to the US. Based on the simple math of the wide gap between prices in the US and the rest of the world, the flood of imports may have delivered a combined windfall of roughly $500 million, divided between the producers who’ve been able to sell their metal at high premiums, logistics companies being paid top dollar to fast-track shipments, and — the lion’s share — to traders.
“Unfortunately we have to pass the increase to the customers, and we have no idea how they’re going to handle it,” said Charles Bareijsza, chief executive officer and president of New Jersey-based distributor Metal Associates, which sells copper products including sheets, pipes and wires. “We tried to forewarn them. I called our largest customer and I said to them, ‘Be prepared.’”
Copper to Come Home!
Trump on Truth Social February 25, 2025..
Like our Steel and Aluminum Industries, our Great American Copper Industry has been decimated by global actors attacking our domestic production. To build back our Copper Industry, I have requested my Secretary of Commerce and USTR to study Copper Imports, and end Unfair Trade putting Americans out of work. Tariffs will help build back our American Copper Industry, and strengthen our National Defense. American Industries depend on Copper, and it should be MADE IN AMERICA – No exemptions, no exceptions! America First creates American jobs, and protects our National Security. It’s time for Copper to “come home.”
That is the “truth” that launched the massive imports.
A DOMINANT Copper Industry
The tariff front-running culminated with Trump’s Truth Social Post on July 9.
I am announcing a 50% TARIFF on Copper, effective August 1, 2025, after receiving a robust NATIONAL SECURITY ASSESSMENT. Copper is necessary for Semiconductors, Aircraft, Ships, Ammunition, Data Centers, Lithium-ion Batteries, Radar Systems, Missile Defense Systems, and even, Hypersonic Weapons, of which we are building many. Copper is the second most used material by the Department of Defense! Why did our foolish (and SLEEPY!) “Leaders” decimate this important Industry? This 50% TARIFF will reverse the Biden Administration’s thoughtless behavior, and stupidity. America will, once again, build a DOMINANT Copper Industry. THIS IS, AFTER ALL, OUR GOLDEN AGE!
Goldman Sacs did not comment when Bloomberg asked. I am sure their traders were in on this big time.
Everyone else will have to pay the price of this nonsense.
Finally, it will be decades, if ever, American producers step up production. Instead, the US produces will see an opportunity to raise prices when then can.
Related Posts
July 8, 2025: Copper Spikes to Record High After Trump’s 50 Percent Tariff Announcement
How Many Jobs Will Trump Create?
Assuming the US produces all the copper it needs, the answer is hugely negative.
Perhaps mining industry employment doubles, if and when US mines get into production.
But that is dwarfed by users of copper, all paying a higher price.
July 9, 2025: Trump Slaps Brazil With a 50 Percent Tariff Over Treatment of Political Ally
The tariff Bizarro World gets more bizarre.
July 10, 2025: Canada Adds 70 Percent More Port Capacity to China to Escape Trump’s Tariffs
Credit Trump for pushing Canada closer to China.
The traders? Off-size bets require off-size liquidity/credit.
It’s the people sitting on the off-size credit that are making out like bandits.
But above all, it’s the people with foreknowledge.
Just wondering, Who do you all think is profiting from fore-running and shorting all Donald’s flip-flopping?
Yep. 50% tariffs on copper might induce new copper production in the US sometime in the next decade. Miners “might” be willing to invest billions in new mines and smelters in the hope that tariffs will remain in place a decade from now. Which will justify their investment and create a few thousand jobs.
In the meantime, our manufacturers and businesses who use copper will pay a 50% tariff on their imports. Making them less competitive compared to their foreign competition. Which threatens hundreds of thousands of jobs.
Some interesting facts about copper:
A Boeing 747 or Airbus 380 contain 190 miles of copper wire.
A typical automobile contains 1+ mile of copper wire.
A typical new house contains 1-2 miles of copper wire.
As the world moves to electrify almost everything, we will need a lot more copper every year. (AI data centers, crypto, EVs, grid improvements etc).
Once again, the billionaire insiders thank you Mr Trump.
check your math, there is a mistake in your convertation. if you do you it properly the prices are exactly the same
There is nothing to check.
LME prices in tons = LME prices in pounds
Beware!
TACO will come back TACO and bite you.
Get rid of copper asap.
Not a big fan of tariffs .. also not a big fan of letting other countries close their markets to us while ours are open to them. That said, the markets are flying in spite of it all and we are slowly cutting crumbs out of the wasteful spending. There must be some message in addition to “Trump is the bogeyman who is the root of all evil in the universe.”
If Trump was being sensible and surgical with his tariffs, a lot more people would be on board or at least less critical. When he does what he’s doing, you can expect a lot of criticism, even from people who voted for him and hoped for the best.
I have to say that I have not agreed with all of his tariff choices. I like that he’s telling nations that it cannot be a one-way street forever … but there are some tariff actions with which I disagree. That said, at least since Reagan … most POTUSs have told NATO we would shoulder all the cost (militarily and financially) and told other nations that we were an open market even if they were not. You can only be a doormat for so long.
What are you even talking about?
The only one-way street is that the USA continues to live above its mean: trade deficits means you’re buying on credit, and the credit is funded by fiscal deficits
Funny you ask. Any time the excrement hits the oscillating unit, all of these European paper tigers look to the US. US has given Ukraine 10x what all of Europe has given them. If you think they don’t see us as the free bodyguard they do … that’s on you. If Russia attacks any European country, first place they’re looking is to the US to fix what they can’t.
Trump makes it impossible for trade agreements…
Trump announced the framework agreement on Truth Social on July 2, just days before the White House’s self-imposed July 8 deadline for trade negotiations. The deal was just the second the administration has reached to avoid its threatened “reciprocal” tariffs, after Trump suggested in an April interview that he’d made 200 deals. According to Trump’s July 2 post, exports from Vietnam will face a 20 percent tariff — down from the 46 percent that was paused in April — or a 40 percent tariff if they originated in a different country. In exchange, Vietnam “will ‘OPEN THEIR MARKET TO THE UNITED STATES,’ meaning that, we will be able to sell our product into Vietnam at ZERO Tariff, the president wrote.
That sent shock waves through Vietnam because their negotiators had not, in fact, agreed to the 20 percent rate; they believed the tariff rate would be around 11 percent, according to the four people. Trump disregarded that figure in his phone call with Vietnamese General Secretary Lâm — who had not been part of the initial tariff negotiations — and instead declared the U.S. would impose a tariff nearly twice as high.
Some on the U.S. side were surprised, too, including outside groups who’d been tracking the talks, according to one Washington-based lobbyist who works with Vietnam and other Asian governments.
“Trump sandbagged everybody,” said the lobbyist. They described the Vietnamese government’s reaction as “surprise, as well as disappointment and anger.”
12,000 jobs in copper mining and copper mills in US
There is not enough capacity in the US to make up for imports which are essential in many industries (especially construction). Those jobs were never at risk.
It is clear that trump is not concerned with the millions of people affected negatively by this. He is in on the trade and his minions are making billions on inside trading.