Copper Holds Near Record as Escondida Halt and China Restocking Squeeze Supply
LME copper held above $14,600 a tonne with the cash-to-three-month spread at its widest since September 1, as a fatal accident halted BHP's Escondida mine and zinc jumped on a Nyrstar smelter review.
Benchmark three-month copper on the London Metal Exchange was slightly weaker at $14,616.50 a metric ton by 1610 GMT on Thursday, having slipped to $14,526 earlier in the session. The metal is up 9% so far this quarter after hitting an all-time high of $14,875 a ton two weeks ago. A firmer dollar holding near a two-month high, fuelled by expectations of additional Federal Reserve interest rate hikes, capped the advance. Chinese financial markets were closed for the Mid-Autumn Festival, removing the largest source of physical demand from the screen and leaving macro flows in charge.
Physical tightness is most visible in the spreads and in warehouse data. The premium of the LME cash copper contract over the three-month benchmark widened to $107.5 a ton, the highest since September 1, from zero a week earlier, signalling tightness for nearby supply. Half of the 252,500 tons of copper stored in LME-registered warehouses has been earmarked for delivery. Comex warehouses now hold roughly 69% of the approximately 1 million tons of copper tracked by global exchanges, supporting concerns about tightness outside the United States. Traders remain wary ahead of any White House decision on refined copper import tariffs, which has already triggered one sharp selloff this month.
Supply risk is building in Chile. Operations at BHP's Escondida, the world's largest copper mine, were suspended on Wednesday after a worker was killed in an accident. Separately, two unions representing workers at Antofagasta Minerals' Centinela mine called on workers to hold a strike vote, adding to pressure during ongoing contract negotiations at Escondida. Zinc was the best performer on the LME, jumping 1.5% to $3,961.50 a ton after Nyrstar said it was launching a strategic review of its loss-making Budel zinc smelting operations in the Netherlands. Aluminium slipped 0.1% to $3,253, nickel added 0.3% to $16,525, lead gained 0.5% to $1,929.50 and tin rose 0.2% to $54,005.
On the demand side, signs of restocking in top consumer China ahead of public holidays on September 25 and October 1 to 7 have supported nearby spreads. RBC Capital Markets analysts said buyers are willing to pay a premium to secure metal sooner, reinforcing the narrative of a tighter market. China's stock markets saw their biggest one-day decline in a month on Thursday as investors were sceptical that a meeting between US President Donald Trump and Chinese President Xi Jinping would deliver a broader breakthrough. Copper has gained 18% so far this year on a combination of grid and AI data centre demand running ahead of mine supply.