Report published August 10, 2026
Copper's Tariff Tightrope: The COMEX-LME Arbitrage Probability Model — Société Générale
Société Générale · August 10, 2026
US Section 232 trade policy has transformed the COMEX-LME copper arbitrage into a policy trade, reopening profitable physical delivery windows into the US as the spread widened past $600/mt. Societe Generale's model reveals the market is pricing a 14.6% probability of a 15% refined copper tariff by January 2027 and a 37% probability of a 30% tariff by January 2028.
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Finvaulta summarizes Société Générale's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.
Key Takeaways
- 1.Copper has transitioned into a policy-driven trade due to US Section 232 investigations, causing US copper inflows to surge to a 12-year high and inventories to exceed LME levels.
- 2.The physical arbitrage window between Europe and the US reopened in June and August 2026 as the COMEX-LME futures spread widened above $600/mt, despite all-in transit costs rising 17% to ~$350/mt.
- 3.Societe Generale's pricing model implies a 14.6% market probability of a 15% refined copper tariff by January 2027 and a 37% probability of a 30% tariff by January 2028, matching prediction market pricing on Polymarket.
Table of Contents
- The COMEX-LME arbitrage
- This time is different: tariffs
- Physical arbitrageurs have had an executable window since February 2025
- Financial arbitrageur
- A simplified physical arbitrage model
- Deriving the market-implied probability of refined copper tariffs from spot market pricing
- Key insights this week
- TRADING SIGNAL SCORECARD
- SG OVERBOUGHT/OVERSOLD INDICATORS (OBOS)
- FLOW ANALYSIS
- LATEST PUBLICATIONS
- CROSS ASSET RESEARCH – COMMODITIES
Report data
Market Pricing Implies a 14.6% Probability of Refined Copper Tariffs by January 2027 — as of August 7, 2026.
| Metric | Estimate | Context |
|---|---|---|
| Historical COMEX Premium over LME | 33.0 $/mt | 28-year historical average COMEX copper premium over LME copper. |
| Arbitrage Spread Dislocation Half-Life | 3.5 days | Average time required for COMEX-LME spread dislocations to mean-revert by half. |
| All-in Europe-to-US Copper Delivery Cost | 350.0 $/mt | Total cost of sourcing LME copper in Europe and delivering into COMEX warehouses in the US. |
| Market-Implied Probability of Jan 2027 Refined Copper Tariff (15%) | 14.6% | Probability derived from COMEX forward curve premium over LME CIF cost. |
| Market-Implied Probability of Jan 2028 Refined Copper Tariff (30%) | 37.0% | Probability derived from COMEX forward curve premium over LME CIF cost for 2028 maturities. |
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