Copper Prices Surge to Record High Amid US Stockpiling

Copper prices have been rising for over a year, reaching a record high of $14,600 per metric ton on the London Metal Exchange in early September. This surge is largely driven by robust future demand from cleaner energy and AI data centers, while miners struggle to expand supply.

The main factor contributing to the current tightness in the market is the US stockpiling of copper, which has drained inventories on the LME. The Commerce Department's investigation into national security led to a proposal for a 15% duty on refined copper starting in 2027 and increasing to 30% in 2028. Although duties were not imposed last year, the possibility of future tariffs has kept the New York-London arbitrage attractive and pulled more material to US ports.

The continued risk of duties has led to a significant decline in LME stocks, with some analysts warning that global mined output could decline this year unless production rebounds later on. The average time it takes for new deposits to move from discovery to output is over 15 years, highlighting ongoing supply risks.