Copper Breaks Another Record as Investors Brace for a Structural Squeeze
Copper rallied to a new all-time high on Wednesday, climbing 3.4% in London to trade above $11,500/ton, as a rush of orders to pull metal from LME warehouses in Asia intensified already-tight physical conditions.
Mining stocks surged alongside the metal, with Chilean producer Antofagasta jumping more than 5% to hit a record valuation.
This move extends copper’s more than 30% year-to-date rally, driven by accelerating withdrawals, major mine disruptions, and an unusual arbitrage between U.S. copper futures and global benchmarks.
Tariff Overhang Is Reshaping Global Copper Flows
Copper markets have been distorted for months as traders ship huge volumes of metal into the U.S. ahead of expected tariffs on primary copper products next year.
Earlier policy announcements triggered record U.S. import demand, and producers have responded by charging record premiums in Europe and Asia — effectively pricing in the profits they could make selling into the tighter U.S. market.
Goldman Sachs analysts noted a “larger-than-expected reacceleration” of flows into the U.S. heading into H1 2026, calling the current setup a classic precursor to a global squeeze.
Market players say the recent spike in LME cancellation notices signals metal is being lined up for export — much of it ultimately likely to end up in U.S. supply chains.
Mine Outages Deepen the Structural Supply Problem
While demand remains uneven — especially in China — supply shocks are dominating price action.
Recent disruptions include:
- Ivanhoe Mines reducing output guidance from Kamoa-Kakula after earlier flooding.
- Glencore cutting its 2025 production outlook (after a multi-year decline in global output since 2018).
- Multiple outages across Chile and Indonesia, two of the largest copper-producing regions in the world.
Despite Goldman Sachs forecasting a 500,000-ton surplus this year, analysts note that all of that surplus exists inside the U.S. — the only market currently experiencing a flood of incoming metal due to tariff strategies.
Everywhere else, inventories are tightening sharply.
A Market Tightening on All Fronts
Most of the copper in LME warehouses today originates from China (already tariffed) and Russia (blocked from U.S. entry). These supplies are unlikely to resolve America’s shortage but could shift regional balances as Asian demand grows.
Meanwhile, major traders — including Mercuria Energy Group — warn that the physical market may enter a major squeeze by Q1 2026, pushing prices further into uncharted territory.
Copper ended Wednesday afternoon still elevated, taking its 2025 gains above 30%.
WSA Take
Copper is behaving like a classic pre-supercycle asset: structurally tight supply, political overhangs, and a bifurcated market where U.S. futures run hotter than global benchmarks. With mine grades declining and energy-intensive smelting hitting constraints, the setup increasingly favors high-quality producers with North American exposure.
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