Copper prices climbed to a two-month high, reaching $14,066.50 per ton on the London Metal Exchange (LME), a 1.4% increase. This surge is primarily attributed to a significant influx of refined copper into the United States, with over 200,000 tons arriving at US ports in July alone. This marks the largest monthly volume since 2014, as traders anticipate potential tariffs on refined imports from the Trump administration.
The substantial concentration of copper in the US has led to a depletion of inventories elsewhere, pushing LME stockpiles to a five-month low. This physical scarcity has resulted in a steep backwardation, with nearby contracts trading at a $99.50 per ton premium over three-month futures, the widest spread since January. Analysts like Geoff Yu of BNY note that this situation is exacerbated by constrained mine output.
In addition to tariff concerns, speculation surrounding a new fee structure proposed by Iran for the Strait of Hormuz has added to market uncertainty, contributing to the upward pressure on copper prices. The rally has positively impacted mining equities, with Freeport-McMoRan (FCX) rising 4.7% and Teck Resources (TECK) climbing 6.4%.
