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Informist, Friday, Sept. 11, 2026

 

By Somen Bose

 

MUMBAI – Thursday's 4% crash in copper futures on the London Metal Exchange after the metal's prices had risen to historical levels indicates the underlying volatility, but experts believe the trigger causing the crash may not last long. As an expert described it, copper's record-breaking rally is beginning to face a tough challenge as uncertainty over US tariffs threatens to unwind the trade that had pulled huge quantities of the metal into the country, while relatively constrained supply growth and longer-term structural demand provide a floor for the market.

LME's three-month copper contract touched an all-time high of $14,875 a tonne Thursday before retreating sharply in the same session. Copper futures on the Multi Commodity Exchange of India also hit a record high of INR 1430.90 per kilogram Thursday before crashing. "From celebrating a fresh record high to watching more than 4% disappear within hours, copper traders witnessed both extremes of market sentiment in a single session," Amit Gupta, senior research analyst, Kedia Stocks and Commodities Research Pvt. Ltd., said in a note.

 

The reversal was driven by traders taking profits after reports emerged that the White House is yet to decide on tariffs on refined copper. The administration is weighing concerns of higher copper prices pushing up manufacturing costs against the benefits of encouraging more domestic mining and refining, Reuters reported quoting two people familiar with the matter.

 

That uncertainty is significant because the prospect of US tariffs has been one of the key forces reshaping copper flows this year. Traders and industrial buyers had accumulated the red metal in the US ahead of potential tariffs, creating an unusually large stockpile and contributing to a substantial premium for copper traded on COMEX over the London market.

 

Fitch Solutions company BMI's latest commodities report puts COMEX copper's average premium over LME copper at 5.6% in 2026, saying the premium encouraged record volumes of copper to be shipped to the US. COMEX inventories stood at 696,000 tonnes, compared with a combined 258,000 tonnes in LME and Shanghai Futures Exchange warehouses, according to the report. The COMEX-LME spread had narrowed to an average 3.8% over the past month, suggesting that the arbitrage that encouraged copper to move into the US has begun to lose some of its strength.

Thursday's selloff does not, however, necessarily represent a fundamental deterioration in copper demand. Instead, it may mark the beginning of a reset in positions that had been built around a specific policy outcome. "Underlying supply conditions remain tight, so this correction looks driven more by positioning than by any genuine shift in demand, and prices could stabilise once the market resets its tariff expectations," Ashish Rajodiya, head of commodity at PL Capital Group, said in a note.

 

"However, one day's policy-driven crash does not erase the fundamental forces that pushed copper to record territory," Gupta said. COMEX inventories had reached 675,185 tonnes by Aug. 25 while US imports of refined copper cathode were nearly 885,000 tonnes in the first half of 2026, more than double the level recorded in the first half of 2024, the year before Donald Trump returned to the White House and began his trade and tariff battles. July imports alone exceeded 220,000 tonnes, including a record 53,290 tonnes from Congo.

 

BMI expects a modest surplus in refined copper this year, even as tight concentrate availability has kept pressure on smelters. Treatment and refining charges in China remain deeply negative, indicating that smelters continue to face shortages of feedstock. Some of that concentrated tightness, however, is expected to ease. Lower shipments from Chile, the world's largest exporter of copper concentrate, have contributed to the recent shortage after storms disrupted port operations. Chilean copper exports are likely to recover in the coming weeks as extreme weather eases. A shipment of sulphuric acid from China is also expected to arrive at Chile's Mejillones port later this month, potentially easing another constraint on Chilean production, according to BMI.

 

The recent rally in copper prices appears to have extended beyond a fundamentally justifiable level, BMI said. However, it has also reflected optimism around artificial intelligence and data centres, with copper futures showing a stronger correlation with the tech-heavy Nasdaq 100 than with the broader Bloomberg Industrial Metals Index in recent weeks. Copper's role in electrification, power infrastructure, and data-centre construction means demand expectations remain an important part of the longer term outlook, it said. Demand in China will be key as the market enters its traditional peak manufacturing season, Manoj Kumar Jain, director and head of commodity and currency research at brokerage Prithvi Finmart, said. 

 

Tariff uncertainty could keep copper highly volatile in the short term, but constrained supply and structural electrification demand keep the medium-to-long-term outlook positive, Gupta said. "Meaningful corrections should be viewed as accumulation opportunities, with our bullish year-end objectives around $16,500 per tonne on LME and 1,600 per kg on MCX, subject to continued supply tightness and resilient global demand," Gupta said.  End

 

US$1 = INR 95.55

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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