Copper and silver futures in New York have surged above international price benchmarks, fueled by rising speculation that President Donald Trump will impose steep import tariffs on metals as part of his expanding trade war. On Thursday, front-month Comex silver futures traded at a premium of over $0.90 per ounce compared to spot prices set in London, nearing levels not seen since December. This price surge reflects traders’ reactions to Trump’s statements about imposing universal tariffs on all imports, including from major economic rivals like China, as well as key trading partners such as Canada and Mexico.
This new spike in premiums comes as financial markets become increasingly anxious about the potential scope of Trump’s trade policies, especially with his inauguration set for January 20. It reported that Trump’s team is considering narrower tariffs on critical goods, potentially including copper, though Trump has since denied the report. On Wednesday, it revealed that the President is contemplating declaring a national economic emergency, which would provide a legal basis for imposing broad tariffs, citing sources familiar with the matter.
“Investors globally have entered the year seeking protection from persistent inflation, mounting fiscal debt concerns, and the uncertainty surrounding Trump’s policies,” said Ole Hansen, head of commodities strategy at Saxo Bank. “The surge in Comex prices is undoubtedly part of the broader narrative of unpredictability tied to Trump’s actions.”
Copper futures on the Comex also traded at a significant premium of $623 per ton over their counterparts on the London Metal Exchange (LME), reaching near-record levels similar to those seen during last year’s global copper squeeze. Traders have been rushing to ship copper into U.S. warehouses to capitalize on the price hike, a trend mirrored by the uptick in New York silver prices.
While these price disparities present lucrative opportunities for traders with metal to deliver into Comex warehouses, they also create substantial risks for those without the necessary supply. Normally, prices in New York and London align closely, with many algorithmic traders and hedge funds profiting from bets that any pricing gaps will soon close.
In copper, this might involve purchasing London contracts while simultaneously selling Comex futures, a common strategy known as arbitrage. However, if the price gap continues to widen, investors could face significant losses. This was a major factor in last year’s copper squeeze, when arbitrage traders suffered mounting losses on bets that Comex prices would fall relative to LME futures. Some analysts and traders now fear a similar scenario could unfold in the silver market, given the limited availability of metal that can be delivered into Comex warehouses.
“We’re heading into a squeeze right now, and most people are overlooking the risks,” warned Daniel Ghali, senior commodity strategist at TD Securities. “Traders are not fully accounting for this potential.”
In the silver market, major dealers have been shipping metal from London to New York to settle arbitrage trades, with Comex silver warehouses seeing an influx of 15 million ounces over the past five weeks. Typically, silver shipments from London take 30 to 45 days to arrive.
However, stockpiles in London have been significantly depleted after four years of substantial shortfalls in global silver production. Ghali cautioned that continued outflows of silver could lead to a further surge in prices.
“We expect this drain to be substantial,” Ghali said. “This is the silver squeeze that investors should be watching closely.”
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