Copper prices rose to a three-month high on Tuesday as supply constraints tightened across global markets and investor sentiment improved on signs of easing U.S.–China trade tensions. The gains marked a continuation of a strong first half of the year for the red metal, driven by inventory drawdowns and macroeconomic developments that have disrupted global trade flows.

A sharp decline in inventories held on the London Metal Exchange (LME) and Chinese warehouses has contributed significantly to the rise in prices. LME copper stocks have fallen by approximately 65% since the start of the year, reflecting an accelerated offloading of physical metal. Simultaneously, the CME’s U.S.-based warehouse holdings have more than doubled, indicating a shift of supply towards the American market. This trend is partly a result of traders moving record volumes of copper to the United States in anticipation of potential tariffs proposed earlier this year by the White House. These stockpile movements have led to market tightness in other regions, especially in Europe and Asia, while creating excess in U.S. inventories.

Market Signals Tightness

The copper market structure is exhibiting clear signs of a supply squeeze. Spot contracts are trading at steep premiums to those for later delivery, a condition known as backwardation. This reflects immediate scarcity in the physical market.

Of particular note is the Tom/next spread, which measures the cost of buying copper for immediate delivery versus the following day. This spread widened again on Tuesday, after peaking at $98 per tonne last week—the highest level since 2021. This surge in short-term premiums further signals stress in near-term supply.

As of 8:39 a.m. London time on Tuesday, copper rose 0.9% to $9,960 a tonne on the LME. It had briefly touched $9,984, the highest price recorded since March 27. In the U.S., copper futures for September delivery on the Comex market climbed more than 2.16% to $5.1925 per pound in early trading—equivalent to $11,423 per tonne. This puts prices within range of the all-time high of $5.277 per pound, which was set in March.

These price increases come as the metal closes out the first half of the year with a 12% gain on the LME, second only to tin in terms of performance among base metals.

Trade Policy and Tariff Uncertainty Remain in Focus

Copper’s recent strength has also been bolstered by improved investor confidence amid signs of progress in U.S.–China trade discussions. Market participants are watching closely for further developments, particularly regarding the U.S. administration’s stance on metal imports.

In February, U.S. President Donald Trump announced a Section 232 investigation into copper imports, a move that has since reshaped global flows and triggered strategic repositioning by market players. The outcome of this investigation—due by November—could further influence pricing, trade routes, and availability.

Investment bank Goldman Sachs, in a note cited by Bloomberg, projected that LME copper prices could reach a peak of $10,050 a tonne in August. The bank attributed this forecast to persistent tightness in supply outside of the United States and ongoing logistical constraints.

While optimism around trade relations has lent short-term support to prices, analysts caution that market volatility may persist until tariff-related uncertainties are resolved. The possibility of further disruptions looms as the U.S. government deliberates next steps in its trade and tariff policy.