LME copper spread flips to premium for first time in 19 months on tariff worries

LONDON: Expectations that U.S. tariffs will be imposed on copper has spurred a flow of material to the United States, tightening supplies on the London Metal Exchange (LME) and spurring a sharp move in a key spread, data showed on Friday.

The spread between the cash LME copper contract and benchmark three-month futures spiked to a premium for the first time in 19 months on Friday.

The copper premium, also known as a backwardation, surged to $71 a metric ton, the highest premium since October 2022, compared to a discount of $119 two days ago.

A backwardation indicates shortages or worries about supplies in the LME warehouse system.

US tariff uncertainty keeps aluminium, copper in tight range

Copper prices on the U.S. Comex exchange have surged more than those on the LME as investors seek to price in potential tariffs that U.S. President Donald Trump may impose after he slapped duties this week on aluminium and steel.

Comex futures are now trading more than $1,000 a ton higher than equivalent LME futures.

“I think that people are pulling the metal out of the LME system to ship it to the U.S. and this is squeezing the short-term supply,” said Dan Smith, head of research at Amalgamated Metal Trading.

Copper inventories in warehouses certified by Comex have more than doubled in less than three weeks to 230,281 metric tons from 98,049 tons on January 27.