Copper Prices Soar Amid Copper Shortage and Widening LME Spread

Copper prices have surged to their highest level in years due to a widening spread between spot and futures contracts on the London Metal Exchange (LME). The cash-to-three-month premium reached $434 per tonne, its highest since October 2021, as short sellers bought back copper contracts ahead of expiry. This has caused a shortage of available copper, with LME warehouse stocks falling to 204,975 tonnes from 389,425 in late May.

The shortage is due to several factors, including Chile's second consecutive production forecast cut and the Gresik smelter outage, which reduce supply available to replenish falling exchange stocks. This has led to a scramble for immediate delivery, with buyers competing for copper available now, causing the premium to rise.

Ole Hansen, Commodity Strategist at Saxo Bank, said that long-term supply pressures will remain after the expiry of LME benchmark monthly contracts on August 19, 2026. The base case scenario is that short sellers complete their contract rolls, allowing the spread to narrow from $543.50 toward $100 to $200 per tonne while cash copper remains above $14,000.