London Copper Hits Record High on Tariff-Driven Arbitrage and Mine Supply Pressures

Copper prices have reached an all-time high on the London Metal Exchange, driven by expectations of tariffs and challenges in mine supply. The benchmark three-month copper futures contract rose as much as 0.8% intraday to $14,533 per ton, surpassing the previous record set in January this year. Since the beginning of the year, copper prices have risen 17% cumulatively, with a 47% gain over the past 12 months.

The price surge is largely attributed to metal transfers triggered by tariffs rather than strong end-user demand, according to Cristián Cifuentes, a senior analyst at Chilean copper industry think tank Cesco. This 'local shortage' has led to a significant draining effect on global inventories, with hundreds of thousands of tons of copper shipped to the US to profit from the price difference.

The tariff-driven arbitrage trade has put pressure on short-term market liquidity, squeezing participants holding short positions and driving copper prices higher. Global mine supply remains under pressure, with a first annual decline since 2017 expected unless the industry achieves a significant recovery in the second half of the year.