Copper Extends Fall as Supply Squeeze Eases

Copper futures dropped to $6.40 per pound on Wednesday, extending the previous session’s losses as a pickup in metal deliveries to London Metal Exchange warehouses helped relieve a historic supply squeeze. LME copper inventories climbed by 20,000 tons on Tuesday, marking their biggest daily increase since April, with Trafigura Group reportedly responsible for a substantial portion of the inflows. Copper had rallied to record highs earlier this month as tightening global supply fueled gains, largely reflecting an arbitrage trade ahead of potential US import tariffs. Meanwhile, top producer Chile expects copper output to decline this year as ongoing disruptions continue to affect mines and development projects. The broader metals complex also faced pressure from elevated global bond yields and firmer oil prices, keeping inflationary pressures and interest rate risks at the forefront of investor concerns.

Copper futures fell to around $6.55 per pound on Tuesday, hitting a two-week low as investors locked in profits after the metal surged to record highs earlier this month. The broader metals market also remained under pressure from rising oil prices, which kept inflationary risks and interest rate concerns in focus. The moves came as prospects for a new agreement between the US and Iran dimmed after President Donald Trump said he was not interested in extending the interim peace deal. Meanwhile, signs of tightening global copper supply continued to provide a floor for prices, as the metal keeps flowing to the US and China while becoming increasingly scarce elsewhere. Top producer Chile also expects copper production to fall 2.6% this year amid persistent setbacks at mines and development projects.

Copper futures jumped above $6.7 per pound on Monday, moving toward fresh record highs amid further signs of tightening global supply. China’s refined copper output is expected to decline for a second consecutive month in August as persistent shortages of copper concentrate and other smelter feedstocks continue to weigh on operating rates, highlighting increasingly tight raw material availability. At the same time, tighter domestic tax-invoice regulations have reduced the availability of VAT-compliant recycled copper, limiting another key source of smelter feedstock and putting further pressure on refined output. In top producer Chile, state-owned miner Codelco reportedly expects copper production to decline this year as it faces setbacks at its mines and development projects. Traders also remained cautious about potential US import tariffs on copper, which have continued to divert metal away from international markets and into US warehouses.