The Rare Earths MMI (Monthly Metals Index) broke its sideways trend and moved down by 4.06%...
The Copper Monthly Metals Index (MMI) accelerated from the previous month, rising 6.31% from October to November.
LME Copper Finds New All-Time High
Both LME and Comex copper prices have been on quite a tear over the past three months. LME prices found a new all-time high at the end of October, breaking above the $11,000/mt mark. Though Comex prices remain short of their tariff-driven peak, as of November 18, they have recovered nearly $1,453/mt of the losses suffered after the end-of-July crash. Both contracts experienced a modest downside correction during the first half of November, followed by sideways price action. However, the long-term trend remains up.
What’s Driving Copper Prices?
Analysts have pointed to various reasons for the strength of copper price action. Some note concerns about the strength of the U.S. dollar in the wake of the Federal Reserve's rate cuts. However, the U.S. dollar index has lent no credence to these concerns, holding just below long-term resistance levels at the 100 mark.
Others suggest that the combination of global electrification needs from data centers, grid investments and renewable energy will remain a long-term tailwind for the red metal. There is certainly truth to this. China, Europe and the U.S. have all directed investments towards updating their electrical grids. Meanwhile, data center growth remains ongoing and will likely offer support throughout 2026. That said, demand from the renewable sector appears less certain. The U.S. has largely pivoted away from this strategy, and it remains uncertain whether growth in China and Europe will continue at the same pace.
The final reasons primarily focus on supply concerns. The world’s second-largest copper mine, Indonesia’s Grasberg, declared a force majeure in September after a mudslide derailed operations. While such disruptions rarely play a meaningful role in price action, the scale of Graberg’s operations relative to global copper supply made this one meaningful. In the wake of the event, surplus forecasts for 2025 shifted to a narrow deficit.
Though Indonesia is reportedly eyeing a partial restart, which could help temper the bulls, it is not the only country facing challenges. Other major producers, such as Chile, Peru and the Democratic Republic of Congo, continue to deal with hurdles ranging from declining ore grades and regulatory/permitting delays to infrastructure bottlenecks.
Funds Build Long Positions, Bubble Ahead?
For whatever reason or combination thereof, bull positions have poured into the copper market. Investment funds, in particular, have significantly increased their long positions on the LME, which rose to a 7-month high by October 24. Simultaneously, funds considerably pulled back short positions on the Comex contract.
The net result for both contracts proved decidedly bullish. While Comex data was cut off by the end of September due to the government shutdown, LME data showed funds began to pull back by the end of October. This saw the uptrend stall, at least in the short term.
Despite the seemingly strong conviction over the last few months, it appears questionable whether prices can maintain their upside trajectory. For one, while the raw material supply constraints certainly exist, they have yet to materialize within the refined market. And though LME stocks witnessed significant drawdowns during the first half, those declines have not been matched on a global scale. SHFE inventories remain well-stocked, while Comex stocks continue to balloon.
Raw material constraints have long plagued the copper market. In 2024, record-low treatment and refining charges (TC/RCs) helped drive the last speculative bubble in copper prices. This saw LME prices jump by more than 33% over roughly three months before the market came crashing down. While low TC/RCs indicated a tight raw material supply, the reality proved far more nuanced. And though the lack of meaningful mine supply growth played a part, the significant expansion of China's smelter capacity was the larger downward driver. Overall, refined output remained robust, which is keeping the market in surplus.
Meanwhile, Chinese demand appears muted, as both consumption and investment data disappointed in October. As the world’s largest metal consumer, a softer Chinese outlook seems to have stalled price momentum across exchanges.
LME, Comex Delta Returns
While prices have stalled, the delta between the LME and Comex contracts has returned. Up until 2025, the two contracts boasted a near-perfect correlation, but the announcement of possible U.S. copper tariffs caused the two to bifurcate. Comex prices witnessed sharp gains during the first seven months of 2025, while LME prices appeared relatively tame. The two returned to parity in late July when the U.S. spared refined copper, alongside copper scrap and concentrate, from the 50% tariffs. However, a historically wide premium began to reemerge by October.
Source: MetalMiner Insights, Chart & Correlation Analysis Tool
U.S. Preparing for Tariffs?
Investors are seemingly concerned that the exclusion of refined copper from U.S. tariffs may not be permanent. The Trump administration opened the door to such speculation by releasing partial findings of the investigation into copper imports.
In its report, the administration noted that, “the Secretary also recommended a phased universal tariff on refined copper of 15% starting in 2027 and 30% starting in 2028. The Secretary further recommended a domestic sales requirement for copper input materials starting at 25% in 2027, a domestic sales requirement of 25% for high-quality copper scrap, and export controls for high-quality copper scrap.”
While the delta between LME and Comex prices remains relatively tame, the split between their respective forward curves over the next few years appears far more drastic. The LME’s curve, for instance, suggests a modest downside bias, while the Comex curve appears decidedly bullish. This is a significant reason behind the increasingly wide spread between the two exchanges.
Adding to such speculation, the U.S. recently included copper on its critical minerals list. Trump has also rolled back U.S. copper smelting regulations, likely in a bid to boost U.S. production. As they did in the steel market, tariffs on refined copper would likely attract increased capacity investment in the U.S.
As of November, there is no definitive answer on whether the government will implement more copper tariffs. Without more clarity, the arbitrage is likely to remain and potentially widen over time. Any announcement from the White House regarding new duties could send Comex prices flying once again.
Biggest Copper Price Moves
- Chinese copper scrap prices witnessed the most significant gains of the overall index, rising 7.29% to $12,382 per metric ton as of November 1.
- U.S. copper producer prices for grades 110 and 122 rose 7.1% to $6.49 per pound.
- U.S. copper producer prices for grade 102 increased 6.81% to $6.74 per pound.
- Chinese copper wire scrap prices rose 6.47% to $11,982 per metric ton.
- LME primary three-month copper prices rose 5.41% to $10,980 per metric ton.
