Copper prices shot up on Tuesday, getting tantalizingly close to their all-time high. Chinese buyers were in a rush to restock before the holidays, and inventories in major markets kept dwindling. The three-month copper contract on the London Metal Exchange ended the day at $14,783 per metric ton. That's a 0.8% uptick, putting it just $92 short of the record set on September 10.
Over in New York, Comex copper for December delivery reached $6.871 per pound. It was just a hair's breadth away from its peak of $6.8885 from September 9. This marks the longest winning streak for copper in four months. The driver? A tightening supply in China, more than any political developments coming out of Washington.
Shanghai's copper cathode stocks plummeted to 43,900 tons last week, their lowest since 2023, according to data from the Shanghai Metals Market. Inventories in Shanghai Futures Exchange warehouses have nosedived 70% since early June. Incoming imports aren't being stored; they're immediately snapped up by fabricators.
On Tuesday, spot cathode in Shanghai demanded an average premium of 1,375 yuan per ton over SHFE futures. That's a hefty jump of 550 yuan in just a day. Buyers are on a shopping spree ahead of the Mid-Autumn Festival and National Day holidays, especially with several domestic refineries planning maintenance in October and November.
The tightening physical market conditions in China are propping up copper prices, even as a stronger dollar looms. In London, cash copper settled at a $62 premium to the three-month contract on Monday. This is a turnaround from an $86 discount a week before, signaling immediate demand for the metal.
Cancelled warrants, which indicate metal earmarked for withdrawal, rose to 122,150 tons on Tuesday. That's nearly half of all on-warrant stock, leaving just 133,725 tons available for the market. Meanwhile, the situation in the U. S. is different. Comex warehouses are holding about 696,000 tons, or 69% of all exchange-monitored copper, after a year of stockpiling in anticipation of tariffs that haven't come into effect yet.
U. S. stocks dipped last week for the first time since April. New Orleans, the main Comex delivery hub, is 82% full, with another 100,000 tons expected by the end of October. This imbalance has been siphoning metal from other parts of the globe for months.
On the supply side, Sprott Asset Management noted that global mined output might decrease this year for the first time since 2017. Disruptions at Freeport's Grasberg mine in Indonesia and Ivanhoe Mines' Kamoa-Kakula in Congo could cut 2026 production by about 600,000 tons.
Chile's BHP faces a deadline on Wednesday to present its final offer to a union of approximately 1,020 supervisors and staff at Escondida, the world's largest copper mine. With the contract set to expire on September 30, a rejection could lead to government-mediated talks before any strike. But Escondida's output already dropped by 22% in July.
LME copper has risen 18% this year, while Comex prices have jumped by 21%. The metal has surged roughly 70% since its April 2025 lows, fueled by demand from grids and AI data centers that outpaces mine supply.
Veteran commodities strategist Jeff Currie emphasized that the physical economy is adjusting to scarcity in the real world. However, Robert Montefusco at Sucden Financial expressed doubts about the rally's sustainability, suggesting that Chinese producers might start selling if prices climb further.
Bloomberg Intelligence's Mike McGlone warned of a broader market correction that could slash copper prices by 20% to 30%. The Federal Reserve's recent quarter-point rate hike, its first since 2023, continues to weigh on industrial metals. Traders are keenly watching the upcoming meeting between President Donald Trump and Chinese President Xi Jinping for any trade cues.
With China preparing to pause for the holidays, the outcome of this summit could decide whether copper hits a new record once Beijing gets back to business.
