Copper Hits Fresh Record on Rising Risk of Tariff-Fueled Squeeze

HG=F +1.92% ANFGF +1.79%

(Bloomberg) -- Copper rallied to a fresh record as a surge in orders for metal in London Metal Exchange warehouses compounded worries that potential US tariffs will fuel a global supply squeeze.

LME prices rallied as much as 2.6% to trade above $11,400 a ton, surpassing a peak struck on Monday, after data from the exchange showed a spike in orders for copper in LME depots in Asia. Mining stocks also rallied, with Chilean copper producer Antofagasta Plc jumping more than 5% to a record high.

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The bellwether industrial metal has been ratcheting higher in recent weeks as a growing chorus of traders and analysts have warned that global inventories could soon be drained to critically low levels as huge volumes of metal are shipped to the US in anticipation of tariffs.

The LME’s global benchmark price is up more than 30% this year, but US futures have rallied even further, with investors betting that President Donald Trump will announce levies on primary forms of the metal.

Trump first formally laid out plans to do so in February, in an announcement that rocked the global copper market and drove US copper imports to record highs. In late July, he wrong-footed the market by saying he’d limit the levies to value-added copper products, while pledging to review whether to push ahead with tariffs on commodity-grade forms of the metal from 2027.

The decision has had huge ramifications in the physical copper market, with traders once again ramping up shipments to American ports as US futures surge. Producers have also announced that they’ll charge record premiums to supply customers in Europe and Asia next year, with buyers in effect compensating them for the additional profits they could make selling to the US.

Major metals trader Mercuria Energy Group Ltd. last week warned that those trade dynamics could fuel a major global supply squeeze by the first quarter of next year, predicting that copper prices will push even deeper into uncharted territory.

At a fundamental level, the copper market has also been hit by a slew of mine outages from Chile to Indonesia that have tightened the market this year, even in a tepid environment for demand. Chinese smelters and miners are locked in supply talks for 2026 that are proving difficult, as miners hold the upper hand in negotiations.

Copper was up  to $ a ton as of 12:20 p.m. on the LME, taking gains for this year to about 30%. Aluminum gained  while zinc was little changed.

--With assistance from Winnie Zhu.

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