Copper heads toward record high on LME as supply tensions build

Copper rose toward a record, with a key price spread in London widening to unusual levels in a sign of intense competition for supply.

The metal’s spot price traded as much as $478 a ton above contracts for delivery in three months on the London Metal Exchange, the biggest gap since a major squeeze in 2021. The backwardation structure is a hallmark of near-term demand outstripping availability.

Copper is up almost 16% this year, as a massive flow of metal into the US — in anticipation of a tariff decision from the Trump administration — leaves markets elsewhere with less material. A focus is now on whether China might start to export some shipments to relieve the crunch.

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Three-month futures advanced 1.4% to $14,363.50 a ton on the LME at 11:56 a.m. in Shanghai, building on seven weekly gains. The surge has put prices within reach of the intraday record set in January at $14,527.50 a ton.

“There seems to be momentum for it get there,” David Wilson, metals strategist at BNP Paribas SA, said in an interview. “It’s moving into overbought territory, but I don’t know if that means anything at the moment, given how tight it is.”

LME-tracked inventories have shrunk to just above 200,000 tons, the smallest volume since February. The ballooning backwardation can indicate a market squeeze, where holders of short positions — or bets on losses — have to buy back contracts at escalating prices, or scramble to secure physical metal for delivery.

A quirk of the current situation is that total global inventories are not particularly low, it’s just that they are concentrated in the US — outside the LME network — as traders bet on President Donald Trump slapping tariffs on the refined metal. In addition, demand in China is not seen as particularly strong.

The White House has kept the market guessing on plans for levies on refined copper, with no announcement emerging about seven weeks after a deadline for the Commerce Department to make a recommendation. Meanwhile, flows to the US have continued as markets price in a potential tariff.

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With the cash-to-three month spread spiking, attention is turning to whether more copper might emerge from China, which often happens during periods of extreme backwardation and short-term supply pinches.

“Normally you’d expect to get more Chinese deliveries into the LME,” BNP’s Wilson said. “But the thing is, why would you deliver to the LME when you can still effectively ship metal into the US?”

Copper’s move was the strongest in an upbeat opening for the LME’s main six metals on Monday. Aluminium rose 0.5%, while zinc was up 0.7%.

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