LONDON, June 13 (Reuters): The collective scramble to move as much physical copper as possible to the U.S. before the imposition of import tariffs is creating shortages in the rest of the world.
London Metal Exchange (LME) stocks have fallen to nearly two-year lows with time-spreads flaring into backwardation as inventory drains away.
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This tariff trade will continue until U.S. President Donald Trump's administration makes up its mind whether to add copper to the lengthening list of metals subject to penal import duties.
The Section 232 investigation launched by the administration in February comes with a 270-day deadline. Administration officials have dropped heavy hints it would be completed in accelerated "Trump time" but the market is still waiting.
The CME customs-cleared U.S. copper contract continues to command a hefty premium over the London market. The arbitrage has been a volatile trade but at a current $1,000-per metric ton basis three-month delivery, traders appear to be pricing in a potential 10% tariff.
More importantly, the transatlantic price gap more than covers the costs of shipping, suggesting no immediate let-up in the physical copper tariff trade.
U.S. imports of refined copper jumped to more than 200,000 tons in April, the highest monthly arrival rate this decade.
Imports totalled 455,000 tons in the first four months of the year, more than double the tonnage imported over the same period of 2024.
Chilean brands dominate the current import mix, accounting for 61% and 75% of total inbound shipments in March and April respectively.
This data is not surprising. The CME's list of good-delivery brands is relatively restricted but includes 19 from Chilean producers.
LME warehouse stocks of Chilean-brand copper have been virtually cleared out, falling to just 75 tons at the end of May from 25,150 tons at the close of 2024.
It's also noticeable that while Chinese imports of refined metal were flat on a year-over-year basis in the January-April period, those of Chilean metal fell 44%.
