Copper Heads for Record Close in London on Tighter Global Market

Copper is poised to reach a record high after experiencing robust gains driven by indications of decreasing short-term supply in the global market. On August 7, the metal surged up to 0.9 percent on the London Metal Exchange (LME), surpassing the previous record set in mid-May. Growing confidence in demand from data centers and power grids is contributing to the rise, but supply factors have also played a significant role.

Large amounts of copper were exported to the US in anticipation of a decision on import tariffs by President Donald Trump, diverting metal from LME-tracked warehouses worldwide. Additionally, heightened buying activity from China has intensified competition for supplies. Copper prices have risen by approximately 14 percent so far in 2026, building on a series of three consecutive annual gains.

The commodity's upward trend is fueled by the growing demand for electrification as part of the energy transition. However, the demand for copper is limited by diminishing ore grades at some existing mines and the increasing difficulty and cost of developing new pits. ING Bank analysts, including Ewa Manthey, emphasized that supportive fundamentals in copper remain strong due to tight physical markets, low inventories, and constrained mine supply.

The scope and timing of any US import tariff announcement on refined metal will be crucial, as expectations for a levy have pushed New York copper prices above those on the LME, presenting a lucrative opportunity for traders before any fees are imposed. While US stockpiles have surged, there is a risk that the unusual trade flows stemming from the tariff uncertainty are masking broader challenges as the global economy remains uncertain.

The most significant downside risk for copper is a protracted Iran war and sustained Chinese output resilience, which could widen the supply-demand gap to half a million tonnes in 2026, according to Bloomberg Intelligence. Currently, the clearest sign of tighter near-term supply is the widening premium between cash prices and three-month futures on the LME.

On August 6, the spread surged to over $150 a tonne, the highest since October 2025, indicating short-term pressure on buyers, a phenomenon known as backwardation. Copper reached $14,201 a tonne on the LME by 1:57 PM in Shanghai, and is on track for a sixth consecutive weekly gain, the longest streak since 2020. Other metals, including zinc and aluminum, also experienced gains, with zinc nearing a four-year peak and aluminum hitting a four-year high.