Traders pulled a significant quantity of copper out of London Metal Exchange (LME) storage as a price gap between venues opened pockets of profit in the United States and China. People familiar with the matter said the trading house Trafigura was the principal party behind instructions to remove more than 51,000 tonnes of copper from LME warehouses across the U.S. and Asia on Friday.
The scale of the withdrawals was notable. Those orders represented the largest movements from LME warehouses recorded since 2013 and amounted to hundreds of millions of dollars of metal leaving exchange custody.
The immediate driver for the flows was a sustained premium for copper futures on New York's Comex over prices on the LME. Comex contracts have been trading at a higher level than LME contracts for most of the past year, creating a delivery incentive for traders able to supply metal into the U.S. market.
Market participants have been responding to that price relationship. Record volumes of copper were shipped to the United States last year as traders sought to capture the arbitrage between the two exchanges. The most recent withdrawals are a continuation of that dynamic and indicate the trading opportunity is gathering fresh momentum.
Part of the reason for Comex's premium has been the prospect of policy action. The possibility that the Trump administration could impose tariffs on copper has been cited as a factor supporting higher U.S. contract prices relative to those on the LME, which has in turn helped sustain the arbitrage for much of the previous year.
Trafigura's steps to extract stock from LME warehouses underline how large trading houses can shift inventory in response to cross-market price dislocations. The moves also reinforce the link between exchange-stored copper balances and merchant flows into destinations where futures prices are strongest.
The situation highlights continuing interaction between commodity storage, international shipments and exchange pricing. Observers noted that Friday's removals were the most significant single-day outflows on the LME in more than a decade, and that the activity reflects a market structure where regional price differences can prompt substantial physical movements.
Summary
Trafigura led orders to withdraw over 51,000 tonnes of copper from LME warehouses in the U.S. and Asia on Friday. The withdrawals, involving several hundred million dollars of metal, were the largest recorded on the LME since 2013. The flows were prompted by a premium for Comex futures in New York over LME prices, a situation that has persisted for most of the past year amid the prospect of U.S. tariffs and that drove record shipments into the United States last year.