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Copper prices surged to a record $14,533 per metric ton on the London Metal Exchange (LME), driven by tightening supplies outside the U.S. and a weaker dollar, according to Reuters. The spike highlights divergent global supply dynamics, with U.S. inventories bolstering prices while China and other regions face shortages, raising concerns over trade tensions and market volatility.

Copper prices on the LME reached a fresh peak of $14,533 per metric ton, surpassing its previous high of $14,527.50 in January, as traders focused on supply constraints outside the U.S. Record Comex copper stocks of 766,795 short tons (695,624 metric tons) and a weaker U.S. dollar, which makes dollar-priced metals cheaper for holders of other currencies, amplified demand. Analysts noted that uncertainty over U.S. import tariffs has prolonged elevated prices, with Benchmark Mineral Intelligence’s Albert Mackenzie warning that "prolonged uncertainty... could sustain price pressures."

The surge in copper prices coincided with a sharp decline in Shanghai Futures Exchange (SHFE) inventories, which fell 85% since mid-March to 63,000 tons—the lowest since January 2024. This decline, coupled with backwardation in both LME and SHFE markets, signaled tight physical supplies in China, the world’s largest copper consumer. Meanwhile, U.S. inventories remained robust, creating a stark contrast in global supply conditions.

Key stakeholders, including copper producers outside the U.S., face heightened export risks due to tariff concerns, while U.S. importers may encounter higher costs amid global shortages. China’s manufacturers, grappling with supply constraints, saw SHFE copper prices in backwardation, with the cash premium over three-month forwards hitting $430 per ton—the highest since 2021. Zinc also rose 1.1% to $3,988 per ton, reflecting broader metal market tightness.

Risks include prolonged tariff uncertainty, which could further distort global trade flows, and potential LME outflows, with 51% of cancelled warrants suggesting over 121,000 tons of copper may leave the exchange. While opportunities are not explicitly mentioned, the divergence in supply dynamics could intensify trade tensions and market volatility.

Copper prices hit a record high due to supply constraints outside the U.S. and a weaker dollar, with risks from tariff uncertainty and potential LME outflows. The divergence in global supply dynamics could intensify trade tensions and market volatility, leaving unresolved questions about long-term policy impacts.

Topics: Financial Markets, Metals Trading, Supply Chain, Global Trade, Commodity Prices, Currency Impact, Market Volatility, Industrial Metals

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Source: ET Markets