Copper reached a record high of $14,617 a ton on the London Metal Exchange today, extending a four-day rally that has pushed the year-to-date gain to approximately 17 percent.
The futures curve has steepened into steep backwardation—spot prices now exceed forward prices by a material margin—a market structure that signals an immediate supply deficit. Near-term stockpile depletion is driving this inversion. LME warehouse inventories have fallen sharply as refined copper redirects toward the United States ahead of proposed tariffs on imports, a shift that capitalizes on the tariff premium embedded in U.S. prices.
The underlying supply crunch is structural. Global mined production faces its first annual decline since 2017 unless output recovers in the second half of the year. Operational disruptions at major copper projects have compounded the supply picture. Shanghai Futures Exchange warehouses hit their lowest inventory levels since 2024 last week.
Demand remains robust. Data centers, renewable energy equipment and power grids are absorbing copper at elevated rates. China, the world's largest copper consumer, heads into its traditional manufacturing peak season, and orders from State Grid Corp. of China appear strong based on market chatter.
Jia Zheng, a trading manager at Suzhou Chuangyuan Harmony-Win Capital Management Co. said copper could "easily" reach $15,000.
Other industrial metals advanced. Three-month copper futures traded at $14,581 a ton as of 11:08 a.m. Singapore time, up 0.5 percent. Zinc jumped 1.1 percent, aluminum rose 0.1 percent, and iron ore futures advanced 0.8 percent to $101.10 a ton.
For fixed-income investors, the copper backwardation carries real implications for inflation expectations. Sustained increases in industrial metal costs filter into producer pricing and, over a 12- to 18-month horizon, can push breakeven inflation rates higher. If the curve steepens further on inflation repricing, duration risk rises—bonds with longer maturities face mark-to-market losses. The backwardation is a real-time read of supply stress that the bond market is beginning to price in.
