Key Takeaways
- Copper prices hit a record peak of $14,703 a metric ton.
- Tight supply outside the U.S. and weak mine output drove the rally.
- Inventories in China and other regions have significantly decreased.
Copper prices have reached a record high, with the metal trading at $14,703 a metric ton on the London Metal Exchange. This significant increase is attributed to tight supply outside the U.S. and weak mine output, according to analysts.
Alice Fox, an analyst at Macquarie, highlighted that falling inventories, particularly in China, are driving the gains. 'This is being amplified by supply concerns given the recent storms in Chile and some downward guidance revisions, the re-escalation of the situation in the Middle East reigniting concerns over costs and acid availability, and the continuing bullish narrative about demand for data centres,' she noted.
The most-traded copper contract on the Shanghai Futures Exchange also saw a rise, reaching its highest level since January 30, at 110,890 yuan per metric ton. This surge in prices reflects the global shortage of the metal, with analysts pointing to the re-escalation of tensions in the Middle East as a key factor.
In the U.S., COMEX inventories have swelled to a record 766,795 short tons, or 695,624 metric tons, as of the previous Friday. This increase is ahead of the U.S. holiday on Monday, indicating a significant flow of copper into the U.S. markets. The still-elevated COMEX-LME price spread suggests that physical copper continues to flow into the United States, deepening the supply tightness in markets outside the U.S.
The decrease in inventories outside the U.S. is stark. Copper stocks in LME-registered warehouses have shed nearly 40% since late May, while SHFE inventories stood at around 63,000 tons last week, down 85% from a mid-March peak and the lowest since January 2024. This reduction in supply has contributed to the record-high prices.
Other metals in the London Metal Exchange also saw gains. LME zinc rose 0.5% to $4,002 a ton, after touching $4,035, its highest level in over four years. Aluminium added 0.2% to $3,318.50 a ton, lead rose 0.2% to $1,904, nickel gained 0.5% to $16,805, and tin edged up 0.1% to $55,175.
The continued bullish narrative about demand for data centres and the re-escalation of tensions in the Middle East have further amplified the supply concerns, pushing copper prices to new heights. Analysts predict that these factors will continue to influence the market in the coming months.
