Copper prices on the London Metal Exchange continue to face upward pressure, with the spot premium soaring to its highest level since 2021. Multiple supply disruptions, coupled with a rise in speculative long positions, are pushing copper prices close to a record high.
On Monday, LME three-month copper rose as much as 1.7% intraday to $14,396 per ton, just a step away from the all-time high of $14,527.50 set in January of this year.
The premium of the spot price over the three-month futures contract widened to as much as $543.50 per ton, the highest since the market squeeze in 2021. Copper has now held above $14,000 per ton for nine consecutive trading days.
In a research note on Monday, Barclays analyst Richard Garchitorena pointed out that the trend of tightening copper supply is set to continue, and mining stocks have further room to rise.
David Wilson, head of metals strategy at BNP Paribas, also stated that momentum for copper to break its historical high "is building," even though the market has entered overbought territory.
Multiple Supply-Side Disruptions Push Up Spot Premium
The core driver of the current copper price rally comes from the persistent tightening of supply.
According to Garchitorena's report, Chile's copper production fell 6.7% year-on-year as of June, prompting the country's Copper Commission (Cochilco) to lower its 2026 production forecast by 2.6% to 5.27 million tons.
Mining giant Antofagasta has cut its full-year production guidance by about 5% due to severe weather disruptions at its Los Pelambres mine.
Meanwhile, a shutdown occurred at the Gresik smelter in Indonesia, causing delays in shipments, with the restart timetable yet to be determined.
Inventory data also confirms the tight supply situation. LME copper stocks have plunged 32% compared to a month ago, to 205,000 tons. Garchitorena noted that speculative net-long positions increased to 77,123 lots, up 20% from July, indicating sustained bullish sentiment in the market.
This dynamic is directly linked to expectations of potential US tariffs on refined copper. According to Garchitorena, Comex copper inventories rose 8% over the same period to 735,000 tons. Traders are awaiting the final decision on US tariffs on refined copper, leading to a continuous flow of material into the US market, which further exacerbates the spot tightness on the LME.
Monthly Settlement Day Approaches, Pressure on Shorts May Intensify
According to Bloomberg, this squeeze is happening just as the LME contract approaches its monthly major liquidity node.
The upcoming settlement date on the third Wednesday of the month could create additional pressure for traders holding short positions in the preceding time window.
BNP Paribas's Wilson acknowledged that copper has entered overbought territory but added:
Given how tight the market is at the moment, I'm not sure that means anything.
Against the backdrop of copper prices nearing record highs, Barclays' Garchitorena believes mining stocks have further upside potential.
(Global X Copper Miners ETF performance)
