Copper spot market heats up: price spreads soar, prices nearing historical records.

Copper prices on the London Metal Exchange have climbed towards historical records, with price spreads soaring significantly, reflecting an escalating short-term supply squeeze. The spot price of copper was once at a premium of up to $545 per ton relative to three-month futures contracts, marking the largest backwardation since the historic short squeeze in 2021 when the exchange implemented emergency measures to curb skyrocketing prices. Other price spreads across different maturities similarly surged, with futures prices nearing the peak of over $14,500 per ton reached earlier this January. The current supply tightness is partly due to market expectations that the U.S. may impose import tariffs, leading to a significant influx of copper to the U.S.; on the other hand, recent supply constraints have also attracted more sources of supply. As a result, since mid-May, global warehouse inventories on the London Metal Exchange have shrunk by nearly half.