Insights 
VT 
The global copper market experienced a supply surplus of 147 thousand tons in the first eight months of the year, according to the International Copper Study Group. Rising mine production and stronger metal production, particularly in China and the Democratic Republic of Congo, have contributed to this surplus. These two nations account for 57% of global production.
While the surplus is lower than last year’s 477 thousand tons during the same period, the supply situation has shown improvement since June. Despite this, the sharp rise in copper prices linked to supply concerns may not be entirely warranted.
The global copper market showed a supply surplus of 147,000 tons through August 2025. While this is a significant improvement from the 477,000-ton surplus we saw at the same point in 2024, the supply picture has been strengthening since June. This suggests the fundamental support for higher prices is weakening.
This improving supply is visible in exchange inventories, which traders should watch closely. LME-registered warehouse stocks, for example, have climbed to over 155,000 tonnes this month, recovering steadily from the lows we saw back in the second quarter. This physical inventory build-up confirms that production is indeed outstripping immediate demand.
On the demand side, recent data from China, which consumes over half the world’s copper, suggests a fragile recovery. The latest Caixin Manufacturing PMI for September came in at a lukewarm 50.1, indicating that factory activity is barely expanding. Sluggish demand from the world’s largest consumer makes it difficult to justify a sustained price rally.
Given this backdrop, the recent price spike appears disconnected from fundamentals, presenting an opportunity. Traders might consider buying put options to profit from a potential price drop below key technical support levels. Alternatively, selling out-of-the-money call options or establishing bear call spreads could capitalize on the view that further upside is limited.
We’ve seen similar situations before, such as the volatility spikes in 2022 when supply disruption fears temporarily drove prices higher against a weakening global economy. Those rallies often corrected once the market refocused on broader macroeconomic demand weakness and actual inventory levels. This historical pattern suggests caution is warranted for those chasing the current upward momentum.
The sharp price increase has also likely pushed up implied volatility in the copper options market. This makes strategies that involve selling option premium particularly attractive for those who believe prices will either fall or move sideways in the coming weeks. A drop in volatility, known as “vega crush,” would benefit these positions even if copper prices simply stabilize.
