Key facts
- Copper futures on the London Metal Exchange (LME) hit a record high above $14,500 per ton.
- The surge is attributed to expectations of US tariffs drawing metal into US warehouses, tightening global supply.
- Deteriorating conditions in global mining operations are exacerbating supply issues.
- Copper has climbed 17% this year and 47% over the past 12 months.
- The metal is critical for AI and power grid buildouts.
- Global inventory and price are simultaneously at highs, with metal stranded in one region unavailable elsewhere.
Copper futures on the London Metal Exchange (LME) surged to a record high above $14,500 a ton on Tuesday, driven by expectations of U.S. tariffs that are prompting significant volumes to be moved into U.S. warehouses. This action is tightening availability in other regions, even amid what is described as subdued demand.
Benchmark three-month futures on the LME gained nearly 1% to reach $14,533 a ton, surpassing the previous peak set in January before experiencing some pullback. The industrial metal, crucial for AI infrastructure and power grid expansion, has seen a 17% increase this year and a 47% rise over the last 12 months.
Commodities strategist Jeff Currie noted that the "physical economy is repricing scarcity in the real world," emphasizing that metal stranded in one location is unavailable globally. He pointed out that while tariff front-running and U.S. imports contributed to the recent move, the underlying issue is scarcity due to supply constraints, exacerbated by weather, war, and policymaking against a backdrop of underinvestment.
Adam Gillard of Goldman Sachs observed that for the first time in his career, both global inventory and price are at highs simultaneously, attributing this to metal being concentrated in the U.S. He highlighted strong U.S. imports and regional deficits as key factors, noting that smelters are struggling to manage concentrate-related shorts due to limited available metal outside of China and the U.S. Gillard also mentioned that Chinese inventory is drawing down, and scrap availability remains tight, supporting apparent demand.
Michael Cuoco, head of metals at StoneX Financial, stated that the combination of robust demand growth and supply challenges is expected to lead to a tighter future market balance, supporting higher prices.