Copper Squeeze Sends Prices Soaring Amid Supply Chain Woes

Copper prices have been on a tear since September last year, when a disaster at Freeport-McMoRan's Grasberg mine in Indonesia triggered a supply chain disruption. The mine's output was cut by roughly a third due to the flooding of wet material, which killed two workers and forced a force majeure that is still being worked through.

The global copper market has been affected, with mine production declining 1.1% in the first half of this year. Chile, the world's top producer, logged its weakest second quarter in at least 19 years and has cut its 2026 forecast to a 2.6% decline.

LME warehouse stocks have fallen for 42 straight days through mid-August, and nearly half of what's left is earmarked for withdrawal. This has led to a squeeze in the physical market, contributing to copper prices trading near $14,300 a ton and within reach of the record set in January.

Citigroup sees copper reaching $15,000 a ton by year-end, while Anglo American's Ruben Fernandes believes supply will eventually catch up with demand. However, not everyone is optimistic, as BlackRock's Evy Hambro noted that declining grades at existing operations and tired, old assets are a major concern.