Copper prices are trading near $14,285 per tonne, close to record highs, driven by a combination of factors including an anticipated US import duty and significant supply disruptions. Traders have moved approximately 700,000 tonnes of copper into US warehouses ahead of a September 30 Section 232 deadline for potential tariffs, which could reach 15% in January 2027 and 30% in 2028. This strategic positioning has swelled Comex stockpiles to almost three times the amount held in London Metal Exchange (LME) warehouses, making the global stock figure appear comfortable, yet copper in US warehouses is not readily accessible to European or Asian markets without additional costs and potential tariffs.
The global copper supply chain faces significant challenges, with Chile, the world's largest producer, experiencing its weakest July output since 2011, producing 403,424 tonnes. This 9.4% drop from a year earlier and 9.8% from June was largely due to severe winter storms that disrupted mine operations, damaged infrastructure, and caused power outages, affecting major mines like Los Pelambres, Caserones, and Candelaria. Antofagasta and Lundin Mining, among others, have already cut their 2026 production guidance. These weather-related disruptions, coupled with declining ore grades and project underperformance, are contributing to a rare risk of a global supply decline for copper this year.
The unexpected and widespread nature of these setbacks has led to a revision of supply forecasts. Morgan Stanley, which initially projected an increase in copper supply, has now revised its outlook to flat or slightly declining production, suggesting the potential for the first annual decline in global output since 2017. Despite the high copper prices, which typically incentivize increased production, challenges such as frequent accidents and extreme weather are hindering growth. The International Copper Study Group (ICSG) reported a 1.1% decline in global copper mine output in the first half of the year, with major producers like Codelco and Freeport-McMoRan experiencing double-digit declines. This situation creates a tight market outside the US, where exchange inventories remain low, leading to a premium on nearby copper.
