LONDON- Copper prices rose on Friday as traders raced to capture arbitrage opportunities with growing gaps between prices in Chicago, London and Shanghai.
Benchmark three-month copper on the London Metal Exchange (LME) was up 1 percent at $10,003 a metric ton and has gained 16 percent so far this year.
But that still lagged behind a stellar 21 percent rise on the Chicago Mercantile Exchange (Comex) allowing producers and traders to profit by selling to the US market.
Latin America, home to the world’s biggest copper producers, have advantages of proximity to the US and exemption from US copper import tax.
Some producers in the region have been able to send more output to the US, yet logistics constraints could limit the quantity.
“Traders are willing to pay a premium of up to $300 a ton for May shipment to the US Gulf, but there is no more shipping space,” one producer told Reuters.
The copper rally in Chicago has also outpaced Shanghai. The most traded front-month copper contract on the Shanghai Futures Exchange (ShFE) has gained 15 percent this year
Some are looking for ways to re-export copper stocks out of China to capture some arbitrage gains, a trader said.
