Key facts
- Copper futures on the LME reached a record high above $14,500 per ton.
- The price surge is attributed to potential U.S. tariffs drawing metal into U.S. warehouses, tightening global supply.
- Global mine output declined 1.1% in the first half of the year due to issues at major producers like Codelco and Freeport-McMoRan.
- A force majeure at Freeport-McMoRan's Grasberg mine in Indonesia continues to impact supply chains.
- Inventories are critically low, with metal unavailable in key regions, leading to simultaneous high prices and low inventory levels.
- Copper is considered crucial for AI infrastructure and power grid expansion.
Copper futures on the London Metal Exchange (LME) have surged to record highs, trading near $14,500 a ton, marking the longest weekly winning streak since 1994. This rally is underpinned by a tightening physical market, with LME warehouse stocks falling for 42 consecutive days through mid-August, the longest stretch since 2014. Nearly half of the remaining metal is already designated for withdrawal.
The supply squeeze is multifactorial. A disaster at Freeport-McMoRan's Grasberg mine in Indonesia in September 2025, the world's second-largest copper source, killed two workers and forced a force majeure that continues to affect the supply chain. Freeport has reduced its 2026 output guidance for the complex by approximately one-third, with a full recovery not anticipated before 2027 or 2028.
Global mine output fell 1.1% in the first half of the year, with significant declines reported by Codelco and Freeport. Chile, the top global producer, experienced its weakest second quarter in at least 19 years and has twice cut its 2026 forecast. BlackRock's Evy Hambro cited declining grades at existing operations and aging assets as sector-wide challenges.
Adding to supply concerns, Congo banned exports of copper and cobalt concentrate in early August to encourage onshore processing, impacting a portion of its copper trade and pushing LME prices up. Traders are also anticipating potential U.S. tariffs on refined copper, leading to a record inflow of approximately 200,000 tons into the U.S. in July alone, pushing Comex inventories above 1 million tons.
Despite these supply constraints, Morgan Stanley forecasts refined output to increase by nearly 1% this year, with smelters utilizing more scrap. However, mine supply remains a larger concern, with Citigroup projecting copper prices to reach $15,000 a ton by year-end, and as high as $17,000 if AI-driven demand or a manufacturing rebound outpaces supply.