How powerful is Arlong?

[SSJ2]

Is he physically stronger than Luffy?

 

[Yoshi]

Yes, when he first appears.

Still pretty weak to the next major villain in the Grand Line, though.

 

[Alex Boss]

Arlong is the strongest villain in East Blue arc. And, I thought Luffy and Zoro were stronger than Arlong IIRC.

 

[Captain Cadaver]

Luffy and him are roughly equal in strength during their fight, though Luffy likely has an edge when Arlong doesn't use water and vice-versa. As for Arlong VS Zoro, Zoro didn't reach his level until Whiskey Peak, with the injuries from his fight with Hatchan providing enough of a Zenkai for Zoro to make such a boost (since he even confirms such implications at Enies Lobby).

In terms of physical strength as in lifting feats and the like, he's likely superior to Luffy by some extent.