LME Copper Spreads Surge Amid Short Covering and Tariff Fears by Amit Gupta, Kedia Advisory
LME copper spreads surged to a premium as traders scrambled to cover short positions ahead of contract expiries and potential U.S. tariffs. The cash-to-three-month spread soared to a $249 premium, reversing from a $119 discount just two days ago. This shift signals tightening supplies and market concerns. COMEX copper prices have risen sharply due to speculative buying, creating a $1,050 per ton premium over LME copper. China’s pre-holiday destocking and uncertainty over U.S. tariffs and Russian sanctions have added to market volatility. Analysts suggest that the entire term structure of LME copper is undergoing a significant shift due to these factors.
Key Highlights
LME copper spreads flipped to a premium amid short covering.
Cash-to-three-month spread surged to $249 per ton, highest since 2021.
COMEX copper maintains a high premium over LME, at $1,050 per ton.
Market volatility driven by U.S. tariff concerns and Russian sanctions.
China’s destocking ahead of holidays adds pressure to copper supply.
LME copper spreads surged dramatically as short-covering ahead of contract expiries triggered a sharp reversal in market positioning. The cash-to-three-month spread flipped from a $119 discount to a $249 premium per ton, the highest level since November 2021. This shift highlights supply constraints and growing market concerns over upcoming U.S. tariffs on copper. Meanwhile, COMEX copper prices have surged as investors price in these tariff risks, maintaining a significant premium over LME copper at $1,050 per ton.
The sharp price movement is fueled by traders rolling over or covering bearish positions ahead of settlement next Wednesday. Market participants are also reacting to potential easing of Russian sanctions, which could alter global copper trade flows. Additionally, China’s destocking ahead of the Lunar New Year has contributed to the tightening market structure.
Adding to the volatility, speculation around U.S. tariff policies under the Biden administration continues to drive uncertainty. The market remains highly reactive to geopolitical shifts, with traders closely monitoring policy developments. Analysts suggest that the overall term structure of LME copper is undergoing a major shift, reflecting a mix of fundamental supply constraints and speculative trading activity.
Finally
LME copper markets face heightened volatility as short-covering, tariff fears, and supply shifts drive sharp price movements. Market participants remain on edge, awaiting further policy developments and settlement outcomes.
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