Insights 
VT 
Copper has reached a new all-time high, driven not by industrial demand, but by fragmented inventory systems. This fragmentation has particularly benefitted Copper markets, pressured by the threat of tariffs, which incentivise the movement of available metal into the US. This keeps the London Metal Exchange (LME) tighter than usual.
Global inventory pools are now more easily depleted, resulting in high LME prices. The expectation of data centre capacity growth in China could further disturb the supply-demand balance in coming years. Additionally, the world struggles to absorb mining disruptions in Copper markets, and smelter output is at risk if byproduct precious metals revenues decline.
These market conditions have created a landscape where traditional supply-demand balances do not fully explain base metal returns. The focus is now not only on potential trade deals but on broader themes affecting the metals market today. The FXStreet Insights Team curates market observations from various experts, providing a comprehensive view of industry trends.
With copper hitting a new all-time high above $12,500 per tonne on the LME, we need to understand this is not a traditional demand story. The price strength is coming from a structural fragmentation of global inventories, not a boom in industrial activity. This means the old models of tracking factory output are less useful right now.
The ongoing threat of tariffs, particularly the expanded US measures on processed metals last month, is a key driver. This is incentivizing a constant pull of available copper into the United States, leaving the rest of the world and the LME system unusually tight. LME-registered copper stocks have dipped below 30,000 tonnes, a level we haven’t seen in years, making the market extremely sensitive to any supply shock.
For derivative traders, this signals that volatility is likely to remain high, and any price dips will be shallow and aggressively bought. Buying long-dated call options to play for further upside seems prudent, as the underlying supply squeeze is not a temporary issue. The market is positioned to react violently to any news of physical tightness.
Looking ahead, we see demand catalysts that will worsen this supply imbalance. China’s Five-Year Plan, detailed earlier in 2025, has an aggressive target for data center growth that will require enormous amounts of copper over the next few years. This long-term demand is now being priced into a market that already has no inventory cushion.
The supply side is incredibly fragile, making the market ripe for further squeezes. We simply cannot absorb any more mining disruptions, like the renewed labor strikes at a major Peruvian mine earlier this month. This situation is reminiscent of the commodity supercycle we saw back in 2021-2022, but this time it is driven by a more persistent supply deficit.
