Explained | The Wide Gap Between Copper Prices in London and New York
Key Takeaways
- •COMEX copper futures in New York reached a record high while LME prices stayed at least $300 below their previous record.
- •COMEX contracts settle primarily against copper delivered in the United States, making the New York price sensitive to U.S. trade measures.
- •Copper demand remains strong, driven by construction, power grids, electronics, electric vehicles, and renewable energy infrastructure.
- •Uncertainty over U.S. tariff policy has weighed on transatlantic copper flows and contributed to the price gap.
- •Market participants are tracking U.S. exchange inventories and shipment flows toward American ports as they position for potential policy changes.
Copper prices have climbed to a new record high in New York, while prices on the London Metal Exchange (LME) remained at least $300 short of their previous record, underscoring an unusually wide spread between the world's two benchmark copper markets.
The divergence highlights how the same commodity can trade at markedly different levels on the two exchanges. Copper is priced globally on the LME in London, while the Commodity Exchange (COMEX) in New York lists its own copper futures contract. Under normal conditions, the two prices track each other closely, with differences limited to the cost of transport, financing, and delivery logistics. When the spread widens sharply, it typically signals that regional factors, such as trade policy or localized supply-demand imbalances, are pulling the two markets apart. A sustained premium on one exchange also creates an arbitrage incentive for traders to redirect physical metal toward that market, a flow pattern that can be disrupted when trade policy makes the economics uncertain.
Copper demand remains robust, supporting prices on both exchanges. The metal is a key input in construction, power grids, and electronics, and demand has been bolstered in recent years by the transition to electric vehicles and renewable energy infrastructure, which are copper-intensive. The two exchanges also anchor different regional physical markets: LME warehouses serve as the global benchmark for physical delivery, while COMEX contracts settle primarily against material delivered within the United States, which is why U.S.-specific trade measures can push the New York price away from the global benchmark.
At the same time, the market awaits tariff clarity. Uncertainty over U.S. trade policy has weighed on transatlantic copper flows, with traders and analysts watching for official decisions that could either narrow or widen the New York-London price gap. Beyond the tariff question, market participants are also monitoring U.S. exchange inventory levels and reported shipment flows toward American ports, both of which reflect how traders are positioning around the potential policy change.
Source: CNBC-TV18
