Copper prices hit a new all-time high of $11,200 per metric ton on the London Metal Exchange (LME) on Wednesday, marking a historic rally fueled by a combination of macroeconomic and micro-level factors, alongside a strong return of investment funds to the market after months of caution.
Market data show that speculative long positions held by investment funds in LME copper futures have climbed to their highest level since March — just before what US President Donald Trump called “Liberation Day,” when he launched a wave of tariffs that roiled global markets.
Fears of a full-blown trade war between the United States and China — the world’s largest copper consumer — had heavily weighed on prices earlier in the year. However, the recent partial truce between Trump and Chinese President Xi Jinping has eased some of that pressure, reviving investment appetite for the red metal.
On the supply side, challenges continue to mount. A report by the International Copper Study Group (ICSG) warned that a string of disasters affecting global mines this year could lead to a refined copper supply deficit by 2026. With global inventories already shrinking, it’s easy to see why “Dr. Copper,” as the metal is often called, has returned to the spotlight.
Smart money returns
Following the turmoil in March, investment funds largely avoided copper, wary of potential US tariffs on refined metal. As a result, speculative positions on CME copper contracts fell to their lowest in a decade by August.
But as prices began to recover in August and major producers announced output cuts, long positions in LME copper jumped from 55,325 to 87,152 contracts, while short positions declined — a net shift equivalent to more than one million metric tons of buying pressure.
In the United States, open interest in CME copper also rose to a four-month high, though the weekly Commitment of Traders (COT) report remains unavailable due to the ongoing US government shutdown, complicating fund-flow tracking.
Inventory imbalance
Short positions on LME copper have nearly halved since April, as the sharp price rally forced momentum funds to unwind bearish bets.
Low inventory levels in LME warehouses have further discouraged short-selling, after the spread between cash prices and three-month futures briefly spiked to $224 per ton earlier this month.
Although the market has since returned to contango (where futures prices exceed spot prices), the current $25 spread remains well below August’s $90 level.
Meanwhile, the tariff standoff between Washington and Beijing continues to distort global trade flows. Despite the US delaying new tariffs on refined copper until next July, CME spot prices remain roughly $300 per ton higher than those on the LME — keeping the US import window open and drawing metal out of international markets.
According to Richard Holtom, CEO of Trafigura, shipments to US ports may have slowed but continue to drain LME inventories, which have fallen to just 135,350 tons from 159,000 tons in July. Off-warrant stocks are estimated at only 30,477 tons.
In China, refined copper exports plunged from 118,400 tons in July to 26,400 tons in September, mostly destined for Thailand and Vietnam — neither of which hosts LME-registered warehouses.
Volatility ahead
The persistent price gap between US and international copper reflects the ongoing tariff impact, a factor that could backfire on funds that have re-entered the market aggressively. Any shift in the trade outlook between Washington and Beijing could easily derail the current optimism.
Despite Trump’s description of his meeting with Xi as “tremendous,” markets remain uncertain whether the truce marks a lasting strategic shift or merely a tactical pause.
Copper prices slipped back below $11,000 per ton on Thursday morning as investors cautiously reassessed geopolitical and trade risks.
While fundamental factors such as supply and demand remain strongly supportive, the broader macro environment remains uncertain — suggesting that the bouts of price volatility seen this year are far from over.
