The Copper Chart Causing Alarm

Copper futures in London continue to move higher, once again approaching record highs, as US buyers purchase record volumes from the seaborne market, with imports reaching 200,000 tons in July. A phased US tariff would keep that buying in motion for longer, further tightening the ex-US market and limiting any near-term price correction in London trading.

Rafael Barcellos, head of Latin American Metals & Mining and Pulp & Paper Equity Research at Bradesco BBI, wrote in a note last week that global mine supply is deteriorating. He warned that severe weather in Chile has forced Antofagasta and Lundin to cut their production guidance, further tightening an already stressed physical market.

Barcellos explained:

Copper prices extended their July rally into August, running above US$14,000/t throughout the month and reaching ~US$14,450/t as of August 30. Momentum has been driven by near-term physical tightness, as refined copper continues to flow into the US ahead of a potential import tariff.

While market consensus frames the policy as a binary outcome for copper — a tariff being supportive for prices and a no-tariff decision being negative — we would argue instead that both outcomes are ultimately bearish, and that it is the uncertainty around the tariffs that is intensifying the current upward momentum. Should tariffs not be implemented, the massive inventories accumulated in the US would be redirected elsewhere, increasing global supply availability. However, should the US instead move ahead, US buyers would likely reduce near-term procurement given the elevated stocks already built ahead of the decision, ultimately reducing regional demand and easing tightness elsewhere. That said, a phased tariff (e.g. an incremental rate over the coming years) — which we do see as the most likely scenario — should help keep US buyers in the seaborne market for longer, smoothing rather than removing the demand adjustment and limiting the near-term downside to prices.

On the supply side, the concentrate market remains tight, further exacerbated by extreme weather in Chile, which led Antofagasta and Lundin Mining to lower their 2026 production guidance ranges to 625-655kt (from 650-700kt) and 300-325kt (from 310-335kt), respectively, reflecting disruptions at Los Pelambres and Caserones. On the refined side, amid persistent concentrate tightness, Chinese smelters have increasingly turned to secondary feedstock, with copper scrap imports rising +15% YoY in July (+9% YTD)

Barcellos' view of the copper market was echoed in a Bloomberg report on Friday, which cited International Copper Study Group data showing that global mine production fell 1.1% during the first half of 2026, with output at industry giants Codelco and Freeport-McMoRan declining by double digits.

Separately, Morgan Stanley, which began the year forecasting supply growth, now expects mine production to finish roughly unchanged or slightly lower, potentially marking the first annual decline since 2017.

Producers representing roughly two-thirds of global supply recorded a 3.5% decline during the first half and a 4.1% drop in the second quarter, according to Jefferies data cited by SP Angel. Chile, the world's largest copper-producing country, suffered its weakest second quarter in nearly two decades and now expects annual output to fall 2.6%.

Related:

• Jefferies: "Turns Out, We Weren't Bullish Enough On Copper"
• HSBC Warns Of Commodity "Super-Squeeze" As Goldman Hikes Copper Forecasts

Copper has now advanced for 10 consecutive weeks on the London Metal Exchange.

To sum up, all of this only suggests a structurally bullish period for copper. Demand from electric vehicles, power-grid expansion and artificial-intelligence data centers is accelerating just as physical-market tightness constrains supply and pushes London prices higher.