Copper advanced toward a record as competition for immediately available metal pushed a key London spread to its most extreme level since the market squeeze of 2021.
The cash copper price traded as much as US$543.50 a tonne above three-month futures on the London Metal Exchange. The widening backwardation signals that buyers are paying heavily to secure copper now rather than wait for later delivery.
Three-month futures rose as much as 1.7% to US$14,396 a tonne, putting copper within 1% of its January record of US$14,527.50. The metal has gained almost 16% this year after seven consecutive weekly advances. Copper has not vanished. But much of it is being pulled into the US, reducing immediately available supply elsewhere.
This move is different from a conventional demand rally. Chinese consumption is not considered particularly strong and total global inventories are not exceptionally low.
The problem is location.
The squeeze is being amplified by US trade policy. More than 200,000 tonnes of copper arrived at US ports in July, the largest monthly volume in shipping data going back to 2014, as traders positioned for a possible tariff on refined copper.
The White House has made no announcement roughly seven weeks after the Commerce Department’s recommendation deadline. That uncertainty has kept copper flowing toward US warehouses and away from the LME network.
Extreme backwardation would normally attract metal from China into LME warehouses. But traders can still receive better returns by shipping copper into the US, limiting the market’s usual response to a short-term squeeze.
Mine production offers little relief. Chilean regulator Cochilco expects output from the world’s largest copper-producing country to fall 2% to 5.3 million tonnes in 2026. It projects a refined-market surplus of just 12,000 tonnes—effectively balanced in a 27-million-tonne market.
At the company level, Codelco’s own production fell 8.1% in the first quarter, as Chilean regulator Cochilco expects production from the world’s largest copper-producing country to fall 2% to 5.3 million tonnes in 2026. It forecasts a refined-market surplus of only 12,000 tonnes.
Full production at Freeport-McMoRan’s Grasberg operation in Indonesia is now not expected until 2028.
The Democratic Republic of Congo has also banned exports of copper and cobalt concentrates. The immediate global impact may be limited—Congo exports far more refined copper than concentrate—but the move adds another layer of friction around supply from the world’s second-largest producer.
The timing also adds pressure. The spread widened immediately ahead of the LME’s third-Wednesday delivery date, when traders holding short positions may need to buy back contracts or secure physical copper for delivery.
The risk is that a US tariff decision reverses the trade. If Washington rejects or delays levies, copper could leave US warehouses and return to other markets, rapidly easing the London squeeze.
For now, the signal is clear: the world is not necessarily running out of copper. But much of the available metal is in the wrong warehouses—and buyers needing prompt supply are paying the price.
The main risk to the rally is a reversal in US inventory flows. A decision against refined-copper tariffs could narrow the US premium and release metal back into other markets. High prices are already weakening some Chinese buying.
For now, backwardation—not the headline price—is copper’s clearest warning. Supply exists on paper, but increasingly not where buyers need it.