Copper prices climbed to a record high as the prospect of additional U.S. tariffs collided with output disruptions at major mines.
Tariff Uncertainty Pulls Copper Into the U.S.
Benchmark three-month copper on the London Metal Exchange rose as much as 0.8% intraday to $14,533 a ton on the 7th, according to Bloomberg and other outlets. That topped the previous record of $14,527.50 set in January.
Copper has gained about 47% over the past 12 months, driven by fast-growing demand from power grids, renewable energy equipment, artificial intelligence data centers and electric vehicles. Concerns that supply growth may fail to keep pace with rising demand have added to the upward pressure on prices.
Copper is a core industrial commodity used widely in semiconductors, batteries and power grids because of its high electrical conductivity. Analysts expect demand to keep rising over the medium to long term as investment accelerates in power-hungry AI data centers and the grid infrastructure that supports them.
Supply-side strains are also mounting. Global copper mine output fell 1.1% in the first half of this year from a year earlier, according to the International Copper Study Group, with copper concentrate production down 2.6%. Weak output in major producing countries including Chile, the Democratic Republic of Congo and Indonesia weighed on the total.
AI and Grid Demand Rise While Mine Output Stalls
Still, the main factor behind copper's short-term surge is U.S. tariff uncertainty rather than a genuine increase in end demand.
With expectations persisting that Washington may impose tariffs on refined copper, traders seeking to profit from price gaps have shipped large volumes to the United States since the start of the year. As copper flows into the U.S., available supply in other regions has been shrinking.
The U.S. Commerce Department was required to review the need for additional tariffs on refined copper and submit a report to the White House by June 30, but no final decision has been disclosed more than two months later. The longer the uncertainty over tariffs persists, the more likely shipments to the U.S. are to continue.
Inventories at the New York Commodity Exchange have swelled more than eightfold, from about 80,000 tons in February last year to 695,624 tons as of that day. Outside the U.S., by contrast, available stockpiles are dwindling, deepening regional supply-demand imbalances.
"The possibility of tariffs is having a bigger impact on trading than excess end demand," said Cristian Cifuentes, senior analyst at the Chilean Copper and Mining Studies Center. "This is a case of localized shortages rather than a global demand surplus."
Chilean Supply Disruptions Add to Price Pressure
Supply disruptions are also continuing in Chile, the world's largest copper producer. Output has been weak as operational problems at major mines, declining ore grades and bad weather have compounded one another.
Chile's copper exports fell to $4.63 billion in August from $5.37 billion in July, the lowest level in about a year. Bloomberg said global mine supply could post its first annual decline since 2017 if Chilean production fails to rebound in the second half.
