Copper Prices Soar to Record High as China Supply Concerns Mount

Copper prices hit an all-time high of $14,533 per metric ton on the London Metal Exchange (LME), surpassing a previous record set in January. The surge is largely driven by speculative fund buying from Commodity Trade Advisor (CTA) investment funds, which are often guided by computer programs.

However, not all traders and producers are optimistic about the price increase. Alastair Munro, senior base metals strategist at broker Marex, notes that 'large parts of the discretionary community remain sidelined, wary of getting involved up here with China downstream backing off.'

The copper market has been influenced by the prospect of shortages outside the US, particularly in top consumer China. Stocks in warehouses monitored by the Shanghai Futures Exchange are at a record low of 63,000 tons, down 85% since March and their lowest since January 2024.

Additionally, prices on the SHFE are also in backwardation, suggesting concerns about supplies in the industry. The premium for cash over the three-month forward climbed above $430 per ton in August, its highest level since 2021. This has led to some copper being drawn back into the LME system.