Copper Slips From Record as US Tariff Decision Stalls; Aluminium Stocks Hit 1990 Low

Three-month copper on the London Metal Exchange set a record at $14,533 a tonne, beating the previous high set in January and capping a 17% advance over the past year underpinned by a long-running mismatch between ageing mine supply and demand from data centres, renewables and grids. The rally then reversed sharply. On 10 September the contract fell about 3.6% to $14,233.50 after reports that the White House has not decided whether to impose tariffs on refined copper, with officials weighing higher manufacturing costs against the benefit of encouraging domestic mining and refining. Three-month copper finished the week around $14,240 a tonne, roughly 1.2% lower, ending a ten-week winning streak. The Commerce Department had been reported to favour a 15% levy from January 2027 rising to 30% in 2028, but no decision has been announced.

The reversal showed up immediately in spreads and stocks. The cash-to-three-month spread swung from a $74.50 a tonne backwardation to a $10.50 contango over the week, having already narrowed from more than $500 a tonne on 17 August as fresh deliveries arrived. LME copper stocks were 234,475 tonnes, little changed on the week, with cancelled warrants at 116,875 tonnes and available on-warrant metal around 117,600 tonnes. Shanghai Futures Exchange copper inventories fell 13% on the week to 54,780 tonnes, the lowest since January 2024. COMEX warehouse stocks were reported near 696,000 tonnes, so while total global stockpiles are not unusually low, they remain heavily concentrated in the United States.

Aluminium tightened even as copper eased. LME aluminium stocks of 245,975 tonnes are at their lowest since 1990, and the cash-to-three-month spread moved into a $24 a tonne backwardation from a $0.50 contango a week earlier as cancellations rose by 2,500 tonnes to 4,825 tonnes and available warrants fell to 239,275 tonnes. Shanghai aluminium inventories have declined for eleven consecutive weeks, from a six-year high of 528,885 tonnes on 12 June to 391,498 tonnes, supported by stronger wire and cable activity. Supply relief looks slow: the Middle East accounts for about 9% of global smelting capacity and Emirates Global Aluminium is not expected back at full-scale production until the first quarter of 2027, while Chinese domestic demand is entering the seasonal September-October restocking window.

Zinc was the tightest of the complex. Three-month zinc briefly traded near $4,000 a tonne, a four-year high, with the cash-to-three-month backwardation at a steep $138 a tonne even after deliveries of 9,975 tonnes into LME warehouses. Available on-warrant zinc stocks stood at 80,225 tonnes and one entity holds more than 50% of LME zinc warrants and cash contracts. Analysts at ING argued the copper rally had run ahead of the underlying physical fundamentals, and a decision against tariffs would likely see some US-bound metal return to international markets; for now, lower Chinese inventories and geographically concentrated stocks mean nearby availability remains the key variable into the 16 September prompt date.