Copper prices continued their ascent on Wednesday, following a record-high close on Tuesday. This upward trend is primarily attributed to persistent tightness in short-term supply, despite some alleviation of the intense market squeeze experienced last week. The London Metal Exchange (LME) copper price rose 0.5% to $14,415.50 per ton by 10:30 AM Shanghai time, nearing its all-time intraday peak of $14,527.50 per ton set in January.
Since the beginning of the year, LME copper prices have surged approximately 16%. This increase is largely driven by a significant inflow of copper into the United States, which has depleted stockpiles in other markets. Simultaneously, global copper mines are struggling to ramp up production sufficiently to meet growing demand.
The supply crunch intensified significantly over the past week, as evidenced by the spread between spot copper and futures contracts on the LME. At one point, the spot price exceeded the three-month futures contract by over $500 per ton, indicating buyers' willingness to pay a premium for immediate delivery. Although this spread has narrowed, it remained elevated at around $156 per ton at Tuesday's close, signaling that market supply pressures persist.
Concerns about potential U.S. import tariffs on refined copper have also played a role, causing substantial outflows from LME warehouses. These outflows led to a decrease of 11,925 tons in LME registered warehouses, bringing the total to 106,950 tons on Tuesday. This movement of metal into the U.S. has created an arbitrage opportunity between the CME and LME, further impacting global supply dynamics. Analysts note that while a global copper surplus was anticipated for 2026, the tariff threat has transformed the market into a balanced or even deficit scenario in practice, as U.S. stockpiles, now at a record 675,185 metric tons, are unlikely to be re-exported.
While some analysts, like Macquarie's Alice Fox, believe a tariff could cause prices to "massively spike," Glencore CEO Gary Nagle suggests that any tariff announcement, regardless of the duty percentage, might lead to a price drop due to increased market clarity. However, tight supply conditions, compounded by low stocks, mine disruptions, and an outage at Indonesia's Gresik smelter, could still push copper prices to new record highs in the coming weeks or months, according to Amelia Fu of Bank of China International.
