Copper prices are nearing their all-time high, driven by a confluence of factors including tightening supply and market anticipation of potential US tariffs. The industrial metal was trading at around $14,440 per ton by midday in London on September 7, less than $100 shy of the record $14,527.50 struck in January. Trading activity was somewhat subdued on this particular day due to the Labor Day holiday in the US, but the underlying bullish sentiment remains strong among investors.
The supply side of the copper market is experiencing significant challenges. Global mine supply actually decreased by 1.1% in the first half of the year, a rare occurrence that has defied earlier expectations of modest growth. Major producers, including Chile's Codelco and Freeport-McMoRan Inc., have reported double-digit declines in output. This contraction in supply has been exacerbated by operational setbacks, such as severe winter storms in Chile that led to copper exports sinking to a one-year low of $4.62 billion in August, a 14% drop from July and 3.2% lower year-on-year.
Adding to the price rally are concerns over potential US tariffs. Analysts from ANZ Group Holdings Ltd. predict that copper could reach a new record early next year, fueled by speculation that the Trump administration might introduce new levies. This has led to increased stockpiling, particularly by US buyers, as they seek to mitigate the impact of future tariffs. The combination of declining mine output, geopolitical tensions, and tariff-related trade flows is creating a tight physical market, pushing prices upward. Investment in electric vehicles and new-energy infrastructure is also expected to bolster long-term demand for the metal.
