Copper nears record highs as US, China drain global stocks

The global copper market is approaching a breaking point as simultaneous demand from the United States and China drains inventories from London Metal Exchange warehouses, pushing futures prices toward record highs and raising questions about how long the rally can last.

LME copper futures pushed past $14,000 a ton this week, a ceiling breached only a handful of times in 2026, with traders now eyeing the record above $14,500 reached during a speculative buying spree in China at the end of January. The tightening has been fueled by an unprecedented flow of metal into the US ahead of a potential tariff decision, while Chinese buyers scramble to cover a domestic production shortfall.finance.yahoo

A Two-Front Squeeze

US copper imports exceeded 200,000 tonnes in July alone — the highest monthly level in at least 12 years — as traders position ahead of a possible White House decision on whether to extend duties on semi-finished copper products to raw metal. President Trump imposed a 50% tariff on semi-finished copper products in April but has yet to signal whether refined copper will face similar treatment.investing+1

The arbitrage between higher Comex CME Group Inc. ↘ 0.25% prices and LME prices has driven the fastest pace of US-bound shipments in over a decade. Meanwhile, batches of 4,000 to 6,000 tons have been removed from LME warehouses almost daily over the past two weeks, with much of the metal from facilities in Taiwan and South Korea heading to China. As of August 7, LME copper warehouse stocks stood at 223,000 metric tons, down more than 33% in 30 days.thevaultreport+1

Major trading houses including Mercuria Energy Group, Trafigura Group, Vitol Group, and Hartree Partners have all been withdrawing copper from LME warehouses in recent weeks, according to Bloomberg.finance.yahoo

China's Production Shortfall

Chinese smelters reduced copper production more than expected in July due to tight feedstock supplies and declining ore grades. The country's secondary copper sector, which accounts for a quarter of refined output, has been disrupted by stricter invoicing scrutiny that has hampered small scrap collectors.finance.yahoo

The premium on nearby LME contracts over three-month futures hit $153.75 a ton on Thursday — a backwardation signal that surpassed levels seen during January's squeeze. Citigroup ↗ 0.88% metals strategist Tom Mulqueen said ongoing warehouse withdrawals could fuel a rally toward $15,000 a ton in coming months.finance.yahoo

Tariff Decision Looms

ING Research noted that while the rally reflects genuine supply tightness, much of the recent repricing is built on tariff expectations. If final measures are delayed or narrower than expected, "part of the recent rally could unwind" as stockpiling slows and inventory flows normalize. Trump held a meeting with mining executives on Friday in Washington to showcase efforts to spur critical minerals development.investing+1

"You can have a bit of a step change where the constraint on the supply is causing this draw on inventory," Mulqueen told Bloomberg. "There's not a huge amount of inventory there outside of the US generally".finance.yahoo