Copper is on the verge of another record as a relentless squeeze in near-term supply continues to drive prices higher.
Spot copper on the London Metal Exchange (LME) rose nearly 2% on Monday to US$14,542 ($20,448) per tonne, around US$1 shy of its all-time high set in January.
Meanwhile, the benchmark three-month contract was largely unchanged at around US$14,160 per tonne, widening the premium buyers are paying for immediate delivery.
Earlier, the cash premium over three-month copper surged as high as US$545 per tonne, its widest since the historic LME squeeze of 2021.
The widening spread reflects a sharp depletion of copper inventories in LME-registered warehouses, as traders compete for immediate supply while metal continues to be drawn towards the US ahead of a potential tariff decision.
Inventories dwindle
Since mid-May, copper stockpiles across the LME’s global warehouse network have fallen by almost half and are now at their lowest level since February, according to exchange data.
LME warehouses serve as an important source of last-resort supply for the physical copper industry, while metal stored in the system can also be used to settle expiring futures contracts.
The scarcity has become particularly important as a key date approaches for traders and brokers to cover short positions, allowing holders of readily available copper to demand increasingly large premiums.
The elevated premium for near-term delivery “points to continued scarcity of available metal,” ING commodities strategist Ewa Manthey told Bloomberg.
“We expect these supply constraints to keep the market well supported in the near term, particularly if demand remains resilient.”
US tariffs in focus
The squeeze comes as the copper market is already benefiting from a strong longer-term demand outlook, driven by the metal’s growing use in clean energy, power grids, and artificial intelligence infrastructure.
Adding to the pressure is uncertainty over whether the US will impose tariffs on refined copper.
Traders have been moving metal into the US in anticipation of potential levies, tightening available inventories elsewhere. The White House has so far kept markets guessing over its plans for refined copper tariffs.
On the Comex, the most-traded September contracts touched another high of US$6.7415 per pound (US$14,862 per tonne), before paring gains.
With global inventories dwindling, attention is also turning to China for signs of additional supply.
However, Shanghai Metals Market expects China’s refined copper production to decline year-on-year for a second consecutive month in August, potentially adding further pressure to an already tight global market.
Write to Jackson Chen at Mining.com.au
Image: Glencore
