Notice. FG Capital Advisors is a trade and capital advisory firm focused on commodities, structured credit, and real-asset-linked transactions. The firm is not a bank, lender, broker dealer, or retail investment adviser. All transactions are subject to KYC, AML, sanctions screening, and execution under definitive documentation with regulated counterparties.
How to Secure an LME Discount on Copper Cathodes and Why the −15% Arbitrage Story Is Fiction
The Widespread Claim That Refuses To Die
Across online deal rooms, broker broadcasts, and unsolicited offers, a familiar narrative keeps resurfacing. Copper cathodes are allegedly available at LME minus 5 percent, minus 10 percent, or even beyond minus 15 percent. The buyer is told they can simply resell the copper at or near spot and capture a risk-free profit.
This claim sounds attractive because it frames copper as systematically mispriced. It is also fundamentally incompatible with how physical metal markets function.
Why Deep LME Discounts At Delivery Do Not Exist
Once copper cathodes are produced, assayed, branded, documented, and positioned for export or delivery, they become a liquid and hedgeable asset. At that point, pricing converges tightly around the London Metal Exchange benchmark, adjusted only for location, timing, and logistics.
If a buyer at the point of delivery were genuinely offered copper at LME minus 10 percent or more, that buyer could immediately execute a cash-and-carry trade. They would sell futures on exchange, resell or deliver the physical metal, and lock in a spread far exceeding funding, warehousing, and insurance costs.
That scenario describes a risk-free arbitrage. Competitive commodity markets do not leave those opportunities unclaimed.
Where Large Discounts Actually Appear
Large headline discounts do exist, but they appear upstream, before certainty exists. They are not arbitrage opportunities. They are financing structures where capital is deployed early and risk is absorbed by the buyer or lender.
Pre Export Finance
Capital is advanced against future production or export flows. Repayment is made in metal or receivables. The discount compensates for time value of money, execution risk, jurisdiction risk, and enforcement risk.
Offtake Agreements With Prepayment
Buyers prepay miners or smelters months in advance. Pricing reflects locked capital and surrendered optionality. By the time cathodes are deliverable, the margin has already been earned.
Tolling And Conversion Finance
Traders fund feedstock or processing and lift finished cathodes. Returns are generated across manufacturing, timing, and price exposure, not by flipping spot metal.
Borrowing Base Structures
Banks and funds advance against inventory and receivables with haircuts. The implied discount reflects credit margin and collateral protection, not resale arbitrage.
Why The Myth Persists
The myth survives because pricing is quoted without context. Ex-mine numbers are compared to delivered prices. Financing yield is confused with arbitrage. Risk is quietly transferred to the next participant in the chain.
By the time copper reaches a buyer waiting at the finish line, every meaningful margin has already been monetized by someone who took risk earlier.
The Reality Of Buying Physical Copper Cathodes
Professional buyers focus on reliability of supply, documentation, logistics control, and bankability. Discounts are earned by reducing risk through structure and process, not by expecting mispriced metal.
For verified supply, realistic pricing mechanics, and disciplined execution, review our copper cathodes sourcing and transaction framework:
Claims of LME minus 10 percent or minus 15 percent risk-free arbitrage do not survive contact with real market mechanics. Real copper transactions are executed through structured supply, disciplined pricing, and enforceable terms.
If you are evaluating physical copper cathodes and want to understand how pricing, delivery, and risk allocation actually work, review our sourcing terms and execution framework.
Read Our TermsAbout The Author
Kenny Kayembe is a Belgian Congolese investment banker and physical commodity trader with experience across structured trade finance, metals sourcing, and cross-border commodity transactions involving Africa, Europe, and Asia.
His work spans copper, cobalt, and critical mineral supply chains, with a focus on pre-export finance, offtake structuring, borrowing base facilities, and physical execution risk management. He has advised mining operators, trading houses, and capital providers on transactions involving production finance, logistics control, and bankable documentation.
Kenny combines on-the-ground exposure in African commodity jurisdictions with institutional capital markets discipline. His approach emphasizes enforceability, risk allocation, and realistic pricing mechanics rather than promotional narratives.
Disclosure. This page is provided for informational purposes only and does not constitute investment advice, an offer, or a solicitation. All transactions are subject to due diligence, KYC and AML checks, sanctions screening, and execution under definitive documentation.
