A decline in Copper stocks on the LME has affected the market, pushing the spot price for a ton above $10,000. The premium on the 3-month contract has reached nearly $380, the highest since 2021.

New LME measures seem ineffective here, as the rise in spot price is linked to a buying surge in the US, related to potential tariffs. Long-term supply questions arise with mentions of negative processing fees for Copper smelters.

Chinese smelters are reportedly negotiating long-term contracts with slightly positive processing fees. This development eases some concerns about the end of China’s Copper boom.

What we’re seeing now is a tight squeeze in available Copper, with inventories on the LME dropping to levels that have caught many participants off-guard. This rapid depletion has fuelled a spot price breakout, with the metal pushing past the psychologically important $10,000 mark over the past few sessions. It’s not uncommon to see short-dated pricing spike when stocks become scarce, but what stands out this time is the corresponding jump in the 3-month premium, which sits near $380 per ton—well above historical norms post-2021.

This kind of premium typically suggests a sharp dislocation between immediate supply and future availability. So far, responses from the LME, such as changes in warehouse reporting or delivery terms, have lacked bite in turning sentiment or stemming the price acceleration. The issue doesn’t appear to be mechanical or exchange-driven—it is playing out through real-world demand, particularly in the US.

Thicker chatter around renewed tariffs has prompted forward buying, likely by manufacturers and distributors trying to get ahead of potential import costs. That surge has created ripple effects globally, with traders now reassessing physical logistics and stock flows into North America. It’s not simply about hedging anymore. What started as tactical protection is increasingly dictating price direction on nearby contracts in both OTC and listed markets.

On the production side, we’re facing suppressed margins for smelters, especially those reliant on imported concentrates. A number of deals have reportedly gone through at negative treatment charges, implying that facilities are now willing to accept a loss just to maintain throughput. That’s typically not sustainable and raises concerns about whether output can keep pace should demand stay elevated.

That said, traders monitoring processing fees would have picked up on subtle shifts in risk over the past week. Talks out of China indicate smelters are locking in longer-term contracts at marginally positive yields. These aren’t premium deals by any means, but they are above water, and in this context, that signals a reframing of expectations. There’s now a more stable base forming for long-term supply out of Asia, quieting nerves about a systemic decline in capacity there.

For us, the near-term takeaway is that the curve is compressed, and the stress is concentrated on the front end. Volatility has migrated to spot adjustments and not yet broadened into structure. With existing fundamentals pointing to a stock deficit and sustained overseas demand, we’re positioning accordingly. Reaction windows are narrowing. Use them wisely.