What's driving the move

The rally that took copper to record highs in early September was largely a product of regulatory friction, not pure demand growth. Fear of US import tariffs triggered massive front-running of physical metal into COMEX-approved warehouses, with the Port of New Orleans as the main recipient. Mercuria estimates that up to 500,000 tonnes of copper were redirected to the US to capture the COMEX premium, draining physical liquidity from the rest of the world.

This created a historic arb blowout: the spread between COMEX and LME, which normally sits at $50–150/tonne (freight parity), blew out to $783/tonne. As tariff rhetoric eased, the spread collapsed 92% to $62/tonne in three weeks — a signal that much of the short-covering driving the rally has now faded.

"Arb-related and outright short covering have driven the COMEX gains, which are likely unsustainable" — Citigroup Metals Research

At the same time, Asian physical demand continues to point upward. The Yangshan Copper Premium — the payment importers make for physical metal in Shanghai over the LME price — has jumped to $124/tonne, while smelter margins (TC/RC) have fallen to -$211.70/tonne, i.e. negative territory where smelters pay to secure concentrate. Ole Hansen of Saxo Bank points out that Chinese manufacturers are restocking ahead of national holidays, while macro funds remain confused by tariff uncertainty.

Over the longer term, AI infrastructure stands as a structural pillar of support: Trafigura estimates that AI data centers alone could add 1 million tonnes of annual copper demand by 2030, through cabling and transformer capacity.

Key figures

$14,730
LME copper (tonne)
-1.0%
From ATH ($14,875)
45.1%
Cancelled warrants share
$62/t
COMEX-LME spread
$6.82
COMEX copper (lb)
-1.1%
From ATH ($6.894)
$124/t
Yangshan premium
-$211.70/t
Smelter TC/RC
Copper Stalls 1% Below Record at $14,875/tonne — Double-Top Risk Rises on LME - Bilde 1

Metal and inventory overview

The operational story lies in the inventory data. The LME holds 255,900 tonnes total, but almost half — 115,450 tonnes (45.1%) — are cancelled warrants, meaning metal earmarked for withdrawal and not available for exchange trading. Actual liquidity is therefore 133,725 tonnes, a level that has historically correlated with sharp backwardation episodes.

On the other side of the Atlantic, COMEX inventories have built up to multi-year highs following the tariff front-running, with the Port of New Orleans in particular acting as a bottleneck for incoming tonnage. This asymmetry — overflowing US warehouses versus tightening LME warrants — is the very core of the arb spread's historic swing.

The SHFE and the Chinese physical market remain the tightest corner: the Yangshan premium of $124/tonne and negative TC/RC levels confirm that both concentrate and refined supply are under pressure simultaneously, something that normally doesn't happen in parallel.

Copper Stalls 1% Below Record at $14,875/tonne — Double-Top Risk Rises on LME - Bilde 2

Technical picture

The LME 3-month contract is now testing resistance at the all-time high of $14,875/tonne, with copper sitting about 1% below this level. The prompt curve has moved from an $86/tonne contango discount to a backwardation premium of $26–280/tonne, a sign of continued physical tightness even as the paper market consolidates.

A new rejected attempt at $14,875/tonne without volume confirmation would complete a classic double-top pattern — the next support lies at the backwardation floor around $13,900–14,000/tonne

Craig Lang of CRU Group emphasizes the risk of pricing in further upside in this environment: "It's hard to call a top in this environment. Commodity markets tend to overshoot." With speculative net-long positions above 90,000 COMEX contracts, the market is vulnerable to a rapid unwind if physical flows (China restocking, COMEX inventory building) begin to reverse the arb normalization.

What to watch

  • LME warrant data — watch whether the cancelled warrants share (currently 45.1%) falls back, which would signal easing physical tightness
  • Chinese restocking ahead of national holidays — Ole Hansen's thesis of speculative buying support will be tested in the coming weeks
  • US tariff policy — Tom Price (Panmure Liberum) warns that ambiguity around tariffs could trigger "the largest trade reversal in copper's history" if the tariff is never implemented
  • COMEX-LME arb spread — the current $62/tonne is close to the historical normal level ($50–150/tonne); a renewed widening would signal fresh physical pressure
  • The $14,875/tonne level on the LME — a confirmed break above this level resets the double-top risk; a break below $13,900/tonne confirms the pattern