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The US copper premium has reached a record high after Trump tariffs

The US copper premium has reached a record high after Trump tariffs

Copper prices in the United States soared Monday, after U.S. president Donald Trump announced his intention to impose tariffs on industrial metals.

By 1820 GMT the premium between U.S. Comex Copper Futures and those traded on London Metal Exchange had risen to a new record of $920 per ton, up from $558 last Friday.

Trump is expected to announce new tariffs of 25% on all imports of steel and aluminum, on top existing metals duties. This would be a major step in his trade policy shake-up.

Last week, Trump announced that he would also impose tariffs against copper. He did not provide any details.

Since Trump was elected president, Comex Copper has traded at a higher premium than the LME. This premium ranges from around $250 to $500, as investors tried to factor in the potential impact of tariffs.

The gap widened on Monday, as traders scrambled in order to keep up with the news.

Benchmark Minerals Intelligence stated in a report that "the price arbitrage between COMEX and LME reached an all-time record today, as traders continued pricing in the implementations of copper import tariffs into the US."

It said that the premium implied the market was pricing the equivalent of a 10,5% tariff on Copper.

Due to a short-squeeze, the Comex copper reached an all-time record of $5.1985 per lb in May 2024.

During that time, the parties were forced to either buy back their short positions for a loss or to deliver actual copper to close them. (Reporting and editing by Tomaszjanowski, Polina Devitt and Eric Onstad)

(source: Reuters)