The US copper scrap market is shifting to the LME pricing model

Participants in the US copper scrap market have indicated that they are seeking to use the London Metal Exchange (LME) rather than COMEX copper contracts as the benchmark price for calculating discount rates—a move that gained support after the sharp fluctuations in COMEX prices during the week of July 11.

"Consumers are either transitioning or starting to explore how to switch," said an industry source in the copper scrap sector. "The LME will be seen as the international benchmark price in the US and globally."

Discussions surrounding such a transition have been ongoing for months, amid COMEX price volatility and historically high arbitrage levels between COMEX and LME prices. These discussions intensified significantly after the US announced a 50% tariff on copper imports on Tuesday, July 8.

Industry sources have stated that multiple smelters have already begun shifting from using COMEX prices to LME prices for calculations, or even directly refusing to use COMEX pricing, stating that "everyone will switch to an LME-based pricing formula; it's a done deal."

Marex analyst Ed Meir noted in a report released on July 9 that "the copper market reacted swiftly and sharply to the US tariff announcement."

According to a report from CCTV News, on July 12 local time, US President Trump posted letters to Mexico and the European Union on the social media platform "Truth Social," announcing that starting from August 1, 2025, the US will impose a 30% tariff on products imported from Mexico and the EU.

According to Adam Schaffer, Vice President of International Trade and Global Affairs at the Recycling Materials Association (ReMA), goods that meet the standards of the US-Mexico-Canada Agreement (USMCA) are still considered exempt. The 50% copper tariff announced under Section 232 may include copper scrap.

Although a significant portion of the US copper scrap supply is exported, the impact of rising copper prices has affected discounts on copper scrap, particularly considering the historically high arbitrage levels between the London Metal Exchange (LME) and the New York Mercantile Exchange (COMEX).

(Wenhua Comprehensive)