1. Two Exchanges, Two Markets
The LME, founded in 1877, is the older and globally dominant venue for non-ferrous price discovery. It settles in physical metal delivered to approximately 450 LME-approved warehouses worldwide. COMEX, part of CME Group, settles in US-warehoused metal and was historically a domestic US contract that gained international following during periods of LME-COMEX arbitrage.
The two contracts trade in parallel but produce different prices on the same day because of underlying differences in deliverable metal, warehouse geography, currency, time zone and tax regime. The persistent spread between the two — sometimes a few dollars per tonne, sometimes a hundred or more — is itself a tradeable instrument and is closely watched by physical traders.
2. Contract Specification Comparison
LME Copper Grade A: 25 MT lot, BS EN 1978 cathode, USD/MT, delivery into LME warehouses globally, Official Price at 12:30 GMT.
COMEX HG (High Grade) Copper: 25,000 lb lot (~11.34 MT), Grade 1 cathode, USD/lb, delivery into COMEX-approved warehouses in the US, settlement at 13:00 New York time.
The lot sizes, units, delivery geography and time zones all differ. A buyer converting COMEX to LME-equivalent must multiply COMEX USD/lb by 2,204.62 (lbs per MT) to get USD/MT, then adjust for the LME-COMEX spread observed that day. The conversion is mechanical but it is a real source of misquotation when an inexperienced trader copies a US price into an international contract.
3. Why European Scrap Exports Reference LME, Not COMEX
First, deliverable geography. Material loading from Rotterdam, Antwerp or Hamburg is physically much closer to LME warehouses in Europe than to COMEX warehouses in the US. Pricing against the closer-deliverable market reduces basis risk.
Second, buyer geography. Asian and Middle-Eastern refineries buy on LME because LME has approved warehouses in Singapore, Busan, Kaohsiung and Port Klang. Quoting them in COMEX terms forces them to convert and bear basis risk they did not ask for.
Third, liquidity. The LME 3-month copper contract is the most liquid forward base-metal contract in the world. Hedging instruments are deeper and cheaper to execute. Most physical scrap exporters and refineries hold LME accounts; relatively few hold both.
Fourth, convention. Three decades of physical scrap contracting have established LME as the default. Departure from convention triggers questions on a contract — questions an exporter usually wants to avoid.
4. When COMEX Reference Makes Sense
COMEX reference is reasonable for US-domestic scrap trades, for shipments out of US ports (Houston, Long Beach, Savannah) to Mexico, Central America and parts of Asia, and for buyers whose own internal hedging book sits in COMEX rather than LME. For European exports it is the wrong reference and the buyer should push back.
If an exporter insists on COMEX for a European-origin shipment, the explanation is usually one of two things: the material has been re-traded through a US intermediary who hedges on COMEX, or the exporter is trying to hide a margin by using a less familiar reference. In either case, the buyer should request an LME-anchored re-quotation and compare.
5. The LME-COMEX Spread and Basis Risk
The spread between LME and COMEX copper varies daily, driven by US-China trade flows, tariff regimes, warehouse stocks at each exchange, and dollar liquidity. The 2018–2019 US-China trade dispute saw the spread move several hundred dollars per tonne in weeks. Buyers signing a long-dated contract priced against one exchange and intending to hedge against the other face this basis risk explicitly.
The safest approach for international scrap buyers: price the physical contract against LME, and if any hedging is required, execute it on LME directly. Mixing exchanges across the physical and hedge legs introduces a basis risk that the buyer cannot manage from afar.
6. How to Convert a COMEX Quote to an LME-Equivalent
Step one: take the COMEX HG copper price in USD per pound. Step two: multiply by 2,204.62 to convert to USD per metric tonne. Step three: observe the published LME-COMEX spread for the same day (Reuters, Bloomberg, or specialist platforms publish this). Step four: adjust by the spread to derive an LME-equivalent USD/MT.
Example: COMEX HG at USD 4.50/lb on a day when the LME-COMEX spread is +USD 80/MT (LME above COMEX). USD 4.50 × 2,204.62 = USD 9,921/MT COMEX-equivalent; add USD 80 spread = USD 10,001/MT LME-equivalent. Compare this number against the European exporter's LME-anchored quote.
7. Bottom Line for Scrap Buyers
For European-origin copper scrap going to Asia, the Middle East or Africa, insist on LME-anchored quotations. For US-origin material going domestically or to nearby destinations, COMEX may be acceptable. Never accept a quotation that switches between the two without explanation. And always ask which exchange the underlying hedge sits in if the supplier claims to be hedging — basis risk between LME and COMEX has surprised more than one buyer at settlement.