Copper Prices Hit Record High Amid Global Supply Chain Mismatch

Copper prices have reached a record high of USD 14,737 per tonne on the London Metal Exchange (LME), up nearly 50% in the past year. The Indian Primary Copper Producers Association (IPCPA) attributes this surge to a growing mismatch between global copper mining and smelting capacity.

The IPCPA says that hundreds of thousands of tonnes of copper have been shipped to the United States since January, taking advantage of the price premium between the Comex and LME markets. The US Commerce Department's report on potential copper import tariffs is overdue, but the market continues to factor in the possibility of trade restrictions.

As a result, inventories in LME warehouses have fallen to critically low levels, while Comex stocks have surged to a record 675,000 tonnes. This concentration of copper stocks in the US comes as global mine output has been slightly weaker due to operational challenges at three to four major mines.

The imbalance between mining and smelting capacity is being reflected in treatment and refining charges (TC/RCs), which have fallen to unprecedented levels of around negative USD 1,300 per tonne. Smelters are facing increasing financial pressure as competition for copper concentrates intensifies, while mining capacity fails to keep pace with expanding global refining and smelting capacity.

The IPCPA says that this divergence between mine supply and smelting capacity is creating a structural constraint in the copper market, rather than simply reflecting a temporary inventory imbalance. Copper is increasingly viewed as a strategic industrial commodity due to its extensive use in power grids, electric vehicles, renewable energy, construction, and other infrastructure associated with electrification and the energy transition.