Copper prices are approaching historic highs, with a key cash premium on the London Metal Exchange (LME) expanding to an unusual level, signaling intensifying competition for copper supply.

The LME cash copper price briefly traded at a premium of $478 per metric ton over the three-month contract, marking the largest backwardation since a major short squeeze in 2021. This structure, where spot prices exceed futures, typically reflects short-term demand outstripping available physical supply for immediate delivery.

Copper has gained nearly 16% so far this year. As large volumes of copper stock continue to be shipped to the US ahead of tariff decisions by the Trump administration, available supply in other regional markets has been shrinking.

Three-month copper on the LME rose 1.4% to $14,363.50 per metric ton, heading for an eighth consecutive weekly gain. The rally has pushed prices closer to the intraday record of $14,527.50 per metric ton hit in January.

David Wilson, a metals analyst at BNP Paribas, stated: "Normally, the market would expect more Chinese copper to flow into LME warehouses. But the question is, why deliver to the LME when you can still effectively ship copper to the US?"

On Monday, all six base metals on the LME advanced, with copper leading the gains. Aluminum rose 0.5%, while zinc added 0.7%.