Copper futures on the London Metal Exchange hit a record $14,533 a ton on Tuesday as traders rushed metal into US warehouses ahead of an expected tariff, tightening supply everywhere else. The metal has climbed 17% this year and 47% over the past 12 months, and analysts at Goldman Sachs and StoneX say the physical market is growing tighter still.
Copper futures on the London Metal Exchange gained nearly 1% to reach $14,533 a ton on Tuesday, a record that broke through January's previous peak before the advance faded. Expectations of a US tariff on the metal have pulled record volumes out of the seaborne market and into US warehouses, tightening supply everywhere else even as broader demand stays subdued.
Tariff rush drains metal from other markets
The industrial metal, critical for AI and power grid buildouts, has climbed 17% this year and 47% over the past 12 months, according to Bloomberg data. ZeroHedge had already flagged deteriorating conditions across global mining operations on Monday, adding to the supply woes.
Adam Gillard, managing director in commodity sales at Goldman, wrote in a note that LME copper made its new all-time high on an 80% year-to-date advance, and that the mere threat of a US tariff had already been enough to shift surplus metal toward American buyers. He added that the US has over-imported 730k MT of copper year-to-date, with September imports already tracking at 77k MT so far this month.
Currie says scarcity is being repriced
Veteran commodities strategist Jeff Currie, the former global head of commodities research at Goldman Sachs and now co-chair of Abaxx Markets, argued that copper's rally reflects a broader repricing of scarcity. According to Currie: "physical economy is repricing scarcity in the real world." He added that metal stranded in one part of the world is unavailable elsewhere, and that copper cannot be replaced fast enough to build data centers, expand grids or electrify industry.
A tighter balance ahead
Michael Cuoco, head of metals at StoneX Financial, said the combination of strong demand growth and supply challenges should bring about a tighter future market balance supporting higher prices. Gillard's note also pointed to Chinese copper inventories continuing to draw down, falling 41% year-over-year upstream and 8% year-over-year downstream, adding another source of tightness to a market already short on available metal.
Source: Oilprice.com
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