Copper hits record high as tight supply, US tariff fears boost prices

Copper prices surged to a record high of $14,533 per metric ton on Monday, driven by fears of supply shortages beyond the United States, according to a Reuters report. The dollar's decline also bolstered investor confidence. Traders noted that U.S. trading volumes may remain low due to the upcoming holiday, keeping a close eye on copper and zinc.

The London Metal Exchange's benchmark copper reached this record value, surpassing its previous peak of $14,527.50 set in January. However, it later retreated slightly to $14,518 by 1515 GMT, marking a 0.7% increase from the previous day.

The surge in copper prices is attributed to the shipping of substantial amounts to the U.S. following President Donald Trump's proposal of import tariffs in February. Currently, Comex copper stocks sit at a record high of 766,795 short tons, or 695,624 metric tons. Analyst Albert Mackenzie of Benchmark Mineral Intelligence pointed out that uncertainty surrounding potential tariffs prolongs elevated prices due to material flow towards the U.S.

In addition, elevated premiums for nearby contracts over longer-dated forwards have prompted some copper to return to the London Metal Exchange (LME). However, cancelled warrants—representing metal destined for delivery—account for 51%, implying over 121,000 tons of copper may depart the LME system in the coming weeks.

The premium for cash copper over the three-month forward contract exceeded $430 a ton at the beginning of August, the highest level since 2021, closing around $74 on Friday. Tight supplies in warehouses monitored by the Shanghai Futures Exchange is another sign of the supply crunch, with inventories declining by 85% since mid-March and hitting their lowest level since January 2024.

Meanwhile, zinc climbed 1.1% to $3,988 a ton, buoyed by restricted supplies after touching its highest level since May 2022 at $3,998. A weaker U.S. currency also helped support base metals, as dollar-priced metals became more affordable for non-U.S. holders. Aluminium increased 0.7% to $3,315 a ton, and tin rose 0.4% to $55,100. Nickel fell 0.7% to $16,725, while lead dropped 0.3% to $1,903.