Copper’s 'Great Westward Migration' Is Back

History sometimes repeats itself word for word. This time last year, global copper traders were obsessed—frantically shipping every ton of copper they could lay their hands on to the United States. This year, the same story is playing out again—on the very same stage—and with intensity no less fierce than before. The starting point: the price spread To understand this 'great copper migration,' we must first grasp a single number: the price difference between copper traded on the COMEX (New York Mercantile Exchange) and that on the LME (London Metal Exchange). Under normal circumstances, prices in these two markets barely differ—by just a few tens of dollars per ton—within the natural fluctuation range attributable to freight costs and exchange rates. But over the past year, this spread has gaped open like a wound: at its most extreme, COMEX copper briefly traded over $1,600 per ton higher than LME copper. According to a Caixin Media report dated May 27, near-month COMEX copper futures have surged again—now trading more than $500 per ton above LME spot prices—the first such occurrence since last autumn. What’s driving this shift? Renewed investor enthusiasm for copper—and persistent market speculation that the Trump administration may still impose import tariffs on refined copper. For traders, this isn’t an abstract figure: a $500-per-ton premium, after deducting freight and financing costs, leaves a highly attractive profit margin. Henry Van, Head of Industrial Metals Analysis at Trafigura Group, put it bluntly: “We are in exactly the same situation as last year—copper is being shipped to the U.S. en masse.” He forecasts it’s “highly likely” that U.S. monthly copper imports will rebound to 200,000 tons. Last week, Trafigura acted on this conviction—drawing down hundreds of millions of dollars’ worth of copper from LME warehouses. Sources say this was the largest single withdrawal from LME warehouses since 2013. Insiders revealed that at least part of this move aimed to lock in the COMEX premium. The tariff sword hanging overhead—for a full year The root cause of this commotion is a tariff sword suspended overhead for over a year—still unsheathed. In February 2025, Trump signed an executive order launching a Section 232 national security investigation into copper imports. In the months that followed, markets swung repeatedly between expectations of imposition, exemption, delay, and re-proposal—dragging copper prices up and down in tandem. In July 2025, the U.S. finally announced a 50% tariff on copper—but refined copper was unexpectedly exempted. As a result, COMEX copper prices plunged over 20% in a single day, and the New York–London price spread collapsed instantly—from nearly $3,000 per ton at its peak to just $136 per ton. Yet markets did not settle. How long will the exemption for refined copper last? This question has never had a definitive answer. Under the current schedule, the U.S. Secretary of Commerce must submit a new assessment report on the copper market by June 30, 2026—a report that could pave the way for formal imposition of tariffs on refined copper beginning January 2027.

Issue 163 | Deconstructing a Listed Company: Huayou Cobalt Co., Ltd.

Number of shareholders Historical stock price performance Core business logic At its core, Huayou Cobalt’s business model is straightforward: source the world’s cheapest nickel, cobalt, and copper ores overseas; smelt them in-house into intermediate products; and then manufacture cathode active materials for lithium-ion batteries—ultimately selling those materials to global battery makers. The company earns profits across two stages: first, from price appreciation or low-cost mining and smelting arbitrage; second, from processing metals into nickel-cobalt-manganese (NCM) precursors and cathode materials—earning stable processing fees. As long as its self-sufficiency rate for raw materials remains high, volatility in metal prices is dampened, while the processing segment provides relatively steady profit cushioning. The company’s largest revenue contributor is new-energy battery materials, accounting for 47% of total revenue. Its production process begins with extracting nickel, cobalt, and lithium from its own mines—or supplementing with purchases from the open market—then transporting the raw materials to manufacturing bases in Quzhou, Guangxi, and Indonesia. There, they are first converted into NCM precursors, then sintered into cathode materials, and finally sold to battery manufacturers including LG Energy Solution, CATL, and Tesla. Pricing follows a transparent ‘metal price + processing fee’ model—where the fee component reflects scale advantages and technical capabilities. Let us briefly clarify what NCM precursors and cathode materials are. The lithium-ion batteries powering our smartphones and electric vehicles rely fundamentally on cathode materials—their ‘energy warehouse.’ During charging, electrical current delivers energy to this warehouse for storage; during discharging, the cathode releases that stored energy. In short, the cathode material is the battery’s core working component—its quality directly determines how much electricity the battery can store and how long it lasts. So how are cathode materials made? That’s where NCM precursors come in. ‘Tri-metal’ refers to the three key constituent metals—commonly nickel, cobalt, and manganese (or nickel, cobalt, and aluminum). ‘Precursor’ literally means ‘preparatory substance’: it is not a finished cathode material ready for direct battery assembly, but rather an intermediate semi-finished product. To become functional cathode material, the precursor must be mixed with lithium salts and subjected to high-temperature sintering and other processing steps. Huayou Cobalt’s top revenue-generating business is precisely this precursor manufacturing. Its second-largest revenue stream comes from non-ferrous metals—accounting for 33% of total revenue—primarily nickel and cobalt, plus smaller volumes of copper and lithium. Raw materials are largely self-supplied: lateritic nickel ore from Indonesia is processed via acid leaching to produce nickel hydroxide; copper-cobalt ore from the Democratic Republic of Congo yields crude cobalt hydroxide, which is further refined into electrolytic nickel and cobalt. These products are sold to commodity traders or downstream alloy producers. Pricing tracks benchmark LME nickel prices and MB cobalt prices. Production costs run over 10% lower than externally sourced ores—meaning profits rise when metal prices climb, and shrink when they fall. In 2024, elevated nickel prices pushed gross margins in this segment to 27%, turning it into a true cash cow. The remaining 20% comprises trading and other activities—essentially handling scrap metal and auxiliary materials—contributing 17% of revenue but only 1% gross margin. This segment is essentially unprofitable, functioning mainly as value-added logistics support for customers.

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A London Metal Exchange-linked agency struggles to obtain trading data for sustainable metal premiums, facing controversy over its broad low-carbon copper definition while planning expansions into zinc and nickel.

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LME-linked Group Battles to Secure Trading Data on Sustainable Metals Premiums

LME-linked Group Battles to Secure Trading Data on Sustainable Metals Premiums

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