Global copper prices approached record levels following a six-session rally, supported by rapid inventory drawdowns in Shanghai and London alongside robust pre-holiday seasonal buying in China.
Physical Tightness Drives Backwardation in London and Shanghai
Comex copper for December delivery climbed to $6.8710 per pound, nearing its all-time record high set earlier in the month. Meanwhile, London Metal Exchange three-month copper rose to $14,766 per tonne. Tight physical availability in Asia has pushed the Yangshan copper premium to multi-year highs as imported cathode moves directly to fabricators rather than exchange warehouses.
Shanghai Futures Exchange cathode stocks have plummeted by 70% since early summer, with spot inventories in Shanghai hitting multi-year lows. In London, LME cash copper moved into a steep $62 per tonne backwardation over the three-month contract, indicating immediate physical demand. Available LME warrant stocks dropped sharply after substantial cancellations for metal withdrawal.
Supply Disruptions and Mining Stock Rebound
The physical market squeeze coincides with significant supply disruptions at major global mines. Production constraints at Freeport-McMoRan’s Grasberg operation in Indonesia and output revisions at Ivanhoe Mines’ Kamoa-Kakula complex in the Democratic Republic of Congo have removed an estimated 600,000 tonnes of copper from anticipated global supply.
Shares of primary copper producers rebounded in tandem with metal prices. Major miners including Freeport-McMoRan, Southern Copper, First Quantum Minerals, Lundin Mining, and Antofagasta recorded solid gains, balancing broader market uncertainty surrounding global trade policy and monetary policy interest rate adjustments.
Market Impact
○ Impacted Metals: Copper cathode, copper wire rod, copper scrap, Comex copper futures, LME three-month copper
○ Direction: Bullish
○ Time Horizon: Near-term
○ Affected Industries: Power Grid, Electric Vehicles, Electronics, Construction, Copper Smelting
○ Related Price Reports: Copper Weekly Price Report
○ Watch Item: Monitor Comex warehouse stock levels and upcoming U.S.-China bilateral trade talks for potential shifts in physical copper trade flows.
SuperMetalPrice Commentary:
The sharp divergence between draining Asian and LME warehouses and bulging Comex inventories reflects market distortions created by tariff front-running. As mine supply disruptions at Grasberg and Kamoa-Kakula continue to restrict cathode availability, physical buyers are paying steep premiums to secure prompt metal, keeping upward momentum intact despite broader macroeconomic headwinds.
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