The Copper Arbitrage
The Copper Arbitrage 2025 brought about an interesting trade idea in CME and LME-delivered copper futures this year. First, let's talk about exactly what it is. Copper arb refers to the price difference between CME (USA delivered) Copper and LME (London delivered) Copper. As a result of regional supply and demand, tariffs, and contract specifics, the two don't always trade at the same price. When the gap between the two prices gets very wide, traders can buy the cheaper leg and sell the expensive leg to lock in an almost riskless spread (arbitrage). A few key differences between the two contracts: Specs This refers to the nature of the delivered product. Covers things like weight, quality, lot size, shape, etc. CME delivered copper must be duty-paid and must be cleared of US customs. LME delivered copper, on the other hand, are typically duty-unpaid and more globally oriented. This becomes relevant when tariff shocks hit. Regional Supply and Demand There are key differences ...