Copper prices on the London Metal Exchange continue to face upward pressure, with spot premiums surging to their highest level since 2021. A combination of supply disruptions and rising speculative long positioning is driving prices toward record highs.
On Monday, three-month copper on the LME climbed as much as 1.7% intraday to $14,396 per metric ton, edging within striking distance of the all-time high of $14,527.50 set in January this year.
The premium of spot copper over the three-month futures contract widened to as much as $543.50 per ton, the highest since the 2021 market squeeze, with prices holding above $14,000 per ton for nine consecutive trading sessions.
Barclays analyst Richard Garchitorena noted in a Monday research report that the tightening trend in copper supply is set to persist, leaving room for further gains in mining equities. David Wilson, head of metals strategy at BNP Paribas, also said that a breakout above the historical peak is "building momentum," even as the market enters overbought territory.
Multiple Supply Disruptions Drive Spot Premiums Higher
The primary driver behind current copper prices stems from persistently tightening supply conditions.
According to Garchitorena's report, Chilean copper output fell 6.7% year-on-year through June, prompting the country's national copper commission, Cochilco, to cut its 2026 production forecast by 2.6% to 5.27 million tons. Mining giant Antofagasta has trimmed its full-year output guidance by approximately 5% due to severe weather disruptions at its Los Pelambres mine. Meanwhile, the Gresik smelter in Indonesia has halted operations, delaying cargo shipments with no confirmed timeline for resumption.
Inventory data further corroborates the supply tightness. LME copper stocks have plunged 32% over the past month to 205,000 tons. Garchitorena highlighted that speculative net long positioning has risen to 77,123 contracts, up 20% from July, signaling escalating bullish sentiment in the market.
This dynamic is directly tied to potential tariffs on U.S. refined copper. Per Garchitorena, Comex copper inventories climbed 8% over the same period to 735,000 tons, as traders await a final decision on U.S. import duties for refined copper. Supply continues to flow toward the U.S. market, further exacerbating the spot tightness on the LME.
Approaching Monthly Settlement Date Could Amplify Short-Seller Pressure
As reported by Bloomberg, this round of market squeeze coincides with the LME contract's key monthly liquidity point. In the lead-up to the third Wednesday of each month, this window may exert additional pressure on traders holding short positions.
Wilson of BNP Paribas acknowledged that copper has entered overbought territory but added: "Given how tight the market is right now, I'm not sure it means anything."
With copper prices nearing historical highs, Barclays' Garchitorena believes mining stocks have further upside potential.
(Chart: Global X Copper Miners ETF Performance)