Copper Prices Hold Firm Amid Inventory Declines and Production Hurdles

Copper prices have been showing resilience in recent days, despite modest daily price changes. This is largely due to the persistent drawdown of copper stocks on the London Metal Exchange, which has reached its lowest level since January and declined by nearly 50% since mid-May.

The decline in inventories signals acute physical market pressure as traders and consumers scramble to secure supply amid uncertainty. Additionally, aluminium stocks have also declined, supporting a broader narrative of constrained base metal availability.

Supply-side constraints are intensifying due to production disruptions. Freeport Indonesia's Smelting Gresik division remains temporarily closed for furnace repairs, which is expected to last through the end of August. This outage removes a significant volume of refined copper from the market at a time when alternatives are scarce.

Chile, the world's largest copper producer, is also facing a downturn with production forecasted to drop 2.6% in 2026 to 5.27 million metric tons, driven by weak output from state miner Codelco and BHP's Chilean operations.

Copper is benefiting from a surge tied to the rapid expansion of artificial intelligence technologies. Data centers and power grids require vast quantities of copper for wiring and electrical components, supporting high copper prices.