Why Trade Shocks are Pushing Copper Prices to Record Highs

The global market for copper is navigating volatile conditions.

A session on the London Metal Exchange (LME) on January 6 saw three-month copper futures surpass the US$13,000 per metric tonne level for the first time.

The price increase, a 42% rise over the last year, could suggest the metal’s most substantial rally since 2009, reflecting a combination of geopolitical factors and acute physical scarcity.

Trade distortions and inventory imbalances

A primary cause behind this valuation is a major distortion in global trade flows.

According to analysts at ING, including Ewa Manthey and Warren Patterson, the "Trump Trade" is a critical catalyst. The market is focused on a June 2026 policy review following the 50% tariffs on semi-finished copper products in 2025.

With the possibility of a 15% tariff increase on refined metal, traders have been diverting shipments to the United States ahead of the decision.

This has resulted in what could be described as a "disjointed inventory" situation. Warehouses on the COMEX in the US hold a record 450,000 tonnes, which is about half of all global exchange stocks.

Meanwhile, the rest of the world faces a shortage of the metal. In London and Shanghai, inventories have fallen by more than 55% since last August. This geographical imbalance has left European and Asian manufacturers dealing with high regional premiums while the LME cash-to-three-month spread remains in deep backwardation, which could signal a scramble for immediate supply.

Supply chain fragility

On the supply side, the "just-in-time" delivery model for copper is failing.

Market stability was highly affected on 2 January 2024 by the start of strike action at the Mantoverde mine in Chile. The facility, which is operated by Capstone Copper, accounts for around 0.5% of global mined output. Although a small percentage, the strike acted as a trigger in a market that had already experienced a year of disruptions at major sites like Grasberg and Kamoa-Kakula.

Capstone has stated that production may be reduced to just 30% of capacity during the dispute. For procurement leaders, this highlights that the buffer to absorb supply shocks has all but disappeared.

The new copper economy

The US$13,000 price is reshaping the competitive environment.

Freeport-McMoRan (FCX) appears to be a clear beneficiary. As the main North American producer, its ability to supply US manufacturers without the "tariff-drag" has seen its cash flows reach record levels.

Glencore has adopted a different strategy, moving towards "copper circularity." Glencore is expanding its recycling partnerships with Schneider Electric to bypass the tightening concentrate market as it faces declining ore grades and production challenges at its Collahuasi site.

Meanwhile, Rio Tinto is increasing its focus on its Oyu Tolgoi project in Mongolia with a target of a 15% production increase this year to meet a projected 2026 deficit of 300,000–400,000 tonnes.

J.P. Morgan anticipates a full-year average of US$12,075/t, plus the "AI megatrend" provides a structural basis for demand with data centre expansion alone projected to use an additional 110,000 tonnes of copper this year.

For supply chain leaders, the period of cheap and accessible copper has ended. Success in 2026 will likely rely on regional sourcing, effective recycling loops and engineering copper out of products.