LME Implements Emergency Measures as Copper Prices Surge

The London Metal Exchange (LME) implemented emergency measures to contain a runaway rally in spot copper prices as the market entered a state of backwardation. Cash contracts reached a record near $14,500 a ton, while benchmark three-month contracts traded above $14,100 a ton. The September-delivery contract reached a premium of over $260 over October futures, marking the widest one-month spread since 2021.

This price surge stems from a deepening supply squeeze, with LME copper stockpiles declining for 42 consecutive days to 204,975 tons. Nearly half of the remaining metal is already earmarked for withdrawal. The shortage is driven by increased shipments to China, where smelters face tight feedstock supplies, and the United States.

In the United States, traders are moving metal to avoid potential tariffs on refined copper proposed by the administration of Donald Trump. These arbitrage opportunities have further depleted available spot supplies, forcing the exchange to intervene to stabilize the market.