Something Interesting Is Happening In Copper Markets

There is a sizeable arbitrage window between COMEX and the LME copper price, prices that would normally move in relative harmony. The underlying cause, Reuters suggests, is imbalanced inventory. In this respect, copper is similar to more extreme positions for aluminum and zinc. The U.S. is short of physical inventory relative to the LME.

Even LME inventory is skewed to Asian rather than European warehouses, as we reported last week when looking at the aluminum market. Realization of that squeeze is what was probably behind a sharp reduction in…