Copper Hits a Record as Supply Snarls Set the Stage for Deficits

(Bloomberg) — Copper hit a record in London, with the prospect of an imminent easing in US-China tensions providing a fresh catalyst to a scorching rally built on mine-supply setbacks and tariff-driven trade dislocations.

Three-month futures climbed to $11,200 a ton on the London Metal Exchange, topping a previous peak set in 2024. Year-to-date, the metal that’s an industrial staple and a proxy for global growth is up more than a quarter, and is on course for its best year since 2017.

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It’s been a tumultuous year for the commodity, with setbacks at major mines in Chile, Africa and Indonesia throttling global supplies, while US President Donald Trump’s tariff policies have caused extreme price distortions between the US and the global benchmark set on the LME.

“Copper prices are being supported by a pick-up in risk appetite on optimism about a potential trade deal between the US and China,” said Craig Lang, a principal analyst at CRU Group. The metal has also been supported by the concerns about physical tightness in markets outside of the US, he said.

Traders drew vast quantities of copper into the US in anticipation of proposed levies on the metal earlier this year, capitalizing on a surge in prices on New York’s Comex exchange. In August, Trump ultimately decided to spare commodity-grade forms of the metal from the levies and placed them on value-added copper products instead, but left the door open to imposing them as of 2027.

That’s led to copper continuously gravitating toward the US, exacerbating strains on supply for buyers elsewhere. With mines worldwide spluttering and American inventories effectively stranded, Morgan Stanley predicts the global copper market will face its most severe deficit in more than 20 years in 2026.

Miners have been struggling to keep pace with copper demand for years, but the industry has been rocked in 2025 by major incidents at operations run by Freeport McMoRan Inc, Ivanhoe Mines Ltd, and Chile’s Codelco, as well as operational snags at many other large deposits. Earlier this week, Anglo American Plc warned that copper production from its most important mine would likely be lower than expected next year, following similar warnings from Teck Resources Ltd.

Tallied together, the production mishaps mean global annual copper production is on course to contract for the first time since the onset of the pandemic, according to CRU.

Trade Anxiety

Traders and analysts have been turning increasingly bullish as the disruptions have mounted, with Citigroup calling for prices to hit $12,000 a ton in the first half of next year, and others expecting copper to pass that milestone even sooner.

To be sure, some observers remain cautious about copper’s trajectory, given the mixed outlook for underlying demand. While there’s long-term optimism about rising usage in renewable energy, electric vehicles and data centers, that’s being offset by more immediate anxiety about the burgeoning trade war.

“We still forecast ongoing weakness in China-centered global copper demand growth,” said Tom Price, senior commodities analyst at Panmure Liberum. “Any bounce in copper-trading returns is nice, but there’s an investor hangover on the way.”

Still, usage in China has proven relatively resilient so far, with Goldman Sachs anticipating demand growth of 5.3% for the year. And this week, hopes have been rising that Trump and his Chinese counterpart Xi Jinping will soon strike a deal to dial down trade tensions between the world’s two biggest economies.

Trump is scheduled to meet with Xi at a bilateral summit on the sidelines of the APEC gathering in South Korea on Thursday. Ahead of that, Trump has talked up prospects for a deal between the two countries, saying he expects to lower tariffs that the US has imposed on Chinese goods over the fentanyl crisis.

Copper — along with other commodities priced in US dollars — has also been aided this year by weakness in the currency, which makes raw materials more attractive for overseas buyers. Later on Wednesday, the Federal Reserve is expected to reduce interest rates again, which may hurt the greenback.

LME copper prices rose 1.3% to settle at $11183.50 a ton at 5:50 p.m. London time, extending its year-to-date gain to more than 27%. All other metals except aluminum advanced.

–With assistance from Katharine Gemmell, Julian Luk, John Deane and Yvonne Yue Li.

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