- Global traders pay more than $500/t over LME for Chilean cathodes
- If tariffs take effect, US-bound flows could tighten global supply again
Global copper traders are once again offering unusually high premiums to secure Chilean copper shipments for the US market in 2026, signalling the return of a highly lucrative “tariff arbitrage” trade that disrupted copper flows earlier this year. Large trading houses – including Mercuria, Vitol and Trafigura – have approached Chilean producers with annual supply proposals at premiums reportedly above $500/tonne (t) over LME prices, nearly 10 times higher than what Chinese manufacturers are paying for spot cathode shipments, as per reports.
The renewed rush to lock in long-term supply is driven by expectations that the US will impose tariffs on imported commodity-grade copper in 2026, following President Donald Trump’s commitment to revisit duties first proposed in early 2025. If tariffs materialise, sellers stand to earn higher margins in the US market compared to Asia, making arbitrage extremely profitable.
Earlier this year, traders made significant gains by shipping large volumes of copper into the US ahead of tariff implementation. That buying spree pushed US futures above LME levels, tightened global refined supply, and contributed to a record rally in copper prices. Even as physical demand remained moderate, supply diversion created a scarcity premium, leaving manufacturers in Europe and Asia competing for available cargoes.
Outlook
The new round of US-focused buying raises the risk of tighter global inventories in 2026. For importing nations such as India, sustained diversion of Chilean cathodes could lead to higher import premiums and stronger competition for available tonnages — especially as domestic demand continues to rise faster than refined output.
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