US Copper Hits Record High on Tariff Bets, Halted Shipments

(Bloomberg) — Copper futures on New York’s Comex exchange surged to a record as traders price in the possibility of hefty import tariffs on the crucial industrial metal and on reports of halted shipments from top producer Chile.

Comex copper rose to $5.2255 a pound Tuesday, surpassing the previous record of $5.199 set on May 20. The all-time high also came after a Bloomberg report that Glencore Plc temporarily suspended copper shipments from its Altonorte smelter after an issue affecting the plant’s furnace.

The front-month contract has jumped 29% this year, creating an unprecedented disconnect between US prices and the global benchmark set on the London Metal Exchange.

US copper futures started surging above LME prices in January and the gap widened to record levels after Trump last month ordered the US Commerce Department to conduct a probe into possible copper tariffs on national-security grounds. On Monday, the gap between front-month Comex and LME prices reached an all-time high of more than $1,400 a ton. 

“The uncertainty around tariffs, especially when they would be implemented” should keep the price differential at elevated levels, Matt Schwab, head of investor solutions at hedge fund Quantix Commodities, said in an interview. 

Dan Smith, head of research at AMT, also noted that the price spread of longer-dated contracts on Comex and LME has widened, suggesting that “the expectations for tariffs are going up.” 

The spread is creating huge incentives for traders to shift copper into the US to front-run any potential tariffs. Goldman Sachs Group Inc. and Citigroup Inc. anticipate the US will impose 25% import levies on the metal by year’s end, and traders expect a massive amount of copper will arrive in the US before then.

Kostas Bintas, Mercuria’s head of metals trading, estimates that about 500,000 tons of copper is heading to the US, leaving the rest of the global market perilously short. He predicts LME prices could jump to more than $12,000 a metric ton as the shortage worsens.

Copper on the LME rose 1.6% to settle at $10,112 a ton at 5:51 p.m. in London. Comex copper was up 2.3% at $5.2105.

And while traders and investors are expected to reap profits from moving copper around, US manufacturers are paying costs that price in a substantial part of the expected impact should the hinted-at 25% levy come into effect.

–With assistance from Mark Burton.

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