Copper prices experienced a stall in their rally on Tuesday, with December Comex copper falling 1.3% to $6.6020 per pound (approximately $14,555 a tonne) in New York. This decline followed an earlier session high of $6.7420 and comes after the September contract hit an all-time high of $6.7775 last Wednesday. In London, three-month copper also slipped, ending 0.5% down at $14,218 per tonne after touching a seven-month peak of $14,441.50 earlier in the day. The downturn was attributed to a global bond selloff, a stronger dollar, and resurfacing worries about the global economy.
The market was influenced by significant supply-side developments, particularly in Chile, the world's largest copper producer. In July, Chile's copper output dropped by 9.4% year-over-year and 9.8% from June, reaching its lowest July level since 2011. This was largely due to severe weather conditions, including storms intensified by El Niño, which forced the shutdown of mines like Antofagasta's Los Pelambres and Lundin Mining's Caserones. Antofagasta subsequently revised its 2026 guidance down to between 625,000 and 655,000 tonnes from an earlier 650,000 to 700,000 tonnes, while Lundin trimmed Caserones to 120,000 to 130,000 tonnes. The Chilean national statistics agency also reported a 9.3% decline in mining activity, contributing to a 1.5% year-over-year drop in the country's IMACEC activity index.
Despite these supply constraints and low LME inventories, macro pressures weighed heavily. A stronger dollar makes dollar-denominated commodities more expensive for holders of other currencies, dampening demand. Analysts also pointed to concerns about rising bond yields and increased funding costs, coupled with renewed fighting in the Middle East, as factors contributing to market unease. Furthermore, China's domestic refined copper market faced limited supply, but elevated prices and weak downstream demand led to a decline in spot trading, even as scrap copper procurement increased due to widening profit margins.
Looking ahead, the market faces complex dynamics. CRU initially projected a 639,000-tonne global surplus for 2026 but now considers the market balanced, or even in a deficit, if U.S. imports continue at their current rate ahead of planned tariffs. The U.S. is set to impose a 15% duty on refined copper imports in January 2027, rising to 30% in 2028, leading traders to significantly increase shipments into the country. This has resulted in Comex stockpiles reaching approximately 688,000 tonnes by August 31, nearly triple the LME total, and has drained warehouses elsewhere. However, LME inventories remain low, with around 55% of the total metal in the LME system on cancelled warrants, indicating strong underlying demand for immediate delivery. Sibanye-Stillwater committed $340 million to the Mt Lyell copper-gold mine in Tasmania, targeting 26,000 tonnes of copper annually from 2029.
