Copper Nears Record as Shanghai Stockpiles Hit Three-Year Low

Three-month copper on the London Metal Exchange settled Tuesday at $14,783 a metric ton, up 0.8 percent and just $92 short of the $14,875 record set on September 10, for a sixth straight gain. Comex December copper touched $6.871 a pound in New York, within two cents of its September 9 record settlement of $6.8885. The move has almost fully erased the selloff triggered two weeks earlier when reports that the White House copper tariff plan had stalled knocked more than 5 percent off US prices in a single session. LME copper is now up about 18 percent this year and Comex prices about 21 percent, and roughly 70 percent from its April 2025 lows.

The driver is physical tightness in China rather than Washington. Copper cathode stocks in Shanghai fell to 43,900 tonnes last week, the lowest since 2023, and inventories in Shanghai Futures Exchange warehouses are down roughly 70 percent since early June. Spot cathode in Shanghai commanded an average premium of 1,375 yuan a tonne over SHFE futures on Tuesday, up 550 yuan in a single day, as buyers front-loaded purchases before the Mid-Autumn Festival and the October 1-7 National Day break. Several Chinese refineries have maintenance scheduled for October and November, so refined output is unlikely to rise quickly even if imports continue.

London shows the same squeeze. Cash copper settled at a $62 premium to the three-month contract on Monday, flipping from an $86 discount a week earlier, and cancelled warrants climbed to 122,150 tonnes — nearly half of all on-warrant stock — leaving only about 133,725 tonnes freely available. The United States holds the mirror image: Comex warehouses hold roughly 696,000 tonnes, about 69 percent of all exchange-monitored copper, after a year of tariff-driven stockpiling, with the New Orleans delivery hub already 82 percent full and another 100,000 tonnes due by the end of October. That imbalance has been draining metal from the rest of the world for months.

Supply is not responding to price. Sprott Asset Management said global mined output could fall in 2026 for the first time since 2017, with outages at Freeport's Grasberg in Indonesia and Ivanhoe's Kamoa-Kakula in Congo removing roughly 600,000 tonnes from expected production. BHP faces a deadline to present a final offer to about 1,020 supervisors and staff at Escondida, the world's largest copper mine, whose contract expires September 30; output there already fell 22 percent in July. Benchmark treatment and refining charges for 2026 were settled at zero with spot charges negative, leaving smelter margins deeply squeezed.