Copper hits record high on tight supplies outside US

Copper prices surged to a record high on Monday, driven by fears of supply constraints outside the United States, according to a Reuters report. Traders noted that volumes would likely remain low due to the U.S. holiday, with focus shifting to copper and zinc. The benchmark copper price on the London Metal Exchange peaked at $14,533 per metric ton, eclipsing its prior record of $14,527.50 set in January. It subsequently dipped slightly to $14,518 by 1515 GMT, reflecting a 0.7% increase.

Analysts attribute the price surge to the prospect of shortages outside the U.S., supported by a weaker dollar and a lack of trading activity due to the U.S. holiday. Traders and producers have been shipping significant quantities of copper to the U.S. since President Trump proposed import tariffs in February of the previous year. Currently, Comex copper inventories stand at a record 766,795 short tons or 695,624 metric tons, raising questions about future tariff outcomes and the impact of supply uncertainties.

The elevated premiums for nearby contracts compared to longer-dated forwards have prompted some copper to flow back to the London Metal Exchange (LME). However, cancelled warrants, indicating metal earmarked for delivery, accounted for 51% of the LME's copper holdings, implying substantial copper movement over the next few weeks.

Copper prices in the U.S. have also entered backwardation, suggesting heightened supply concerns in China, the world's largest consumer of the metal. Similarly, zinc prices rose 1.1% to $3,988 per ton, buoyed by tight supplies and a weaker U.S. currency, which makes dollar-priced metals more affordable for international buyers.