Copper Supply Tightness Intensifies as Key LME Spread Surges to Nearly Eight-Month High
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The LME copper tom/next spread blew out to $75 per tonne on Tuesday — the widest since January's record-price spike — as traders stockpiling metal in the US ahead of potential tariffs drain warehouses everywhere else.
What does a $75-per-tonne spread actually mean?
The tom/next spread — the cost of rolling a position by one day — hit $75/t on Tuesday. The last time it was wider was January, when it touched $100/t as copper prices hit all-time highs.
This means → traders holding short positions face intense squeeze pressure ahead of the LME August contract expiry on Wednesday: either buy physical copper at a premium or pay up to roll.
On Monday, spot copper traded at a $545/t premium over the three-month contract — a stark measure of how tight near-term supply has become.
Why has copper suddenly become so scarce?
The core driver: traders have been shipping hundreds of thousands of tonnes of copper to US ports, front-running potential import tariffs under the Trump administration.
In plain terms = the copper hasn't vanished — it has been relocated to America, draining LME warehouses in the rest of the world.
The US Commerce Department was due to recommend on copper tariffs by late June, but the White House has made no announcement. The inflows have not stopped.
This reflects a market betting tariffs are a certainty — the hoarding itself is creating the squeeze, even before any policy is enacted.
Are there any signs of relief?
On Monday, LME global warehouse copper stocks posted their first net increase since June 17, led by over 3,000 tonnes added in Malaysia.
This means → some copper is flowing back into the LME system, but the volume is tiny relative to the hundreds of thousands of tonnes diverted — far from enough to ease the crunch.
What does record copper pricing mean for miners?
Copper is up more than 13% year-to-date, driven by expectations around data-centre buildouts and the renewable-energy transition.
BHP reported on Tuesday that copper revenue overtook iron ore for the first time, making it the company's largest earnings source.
In plain terms = copper is replacing iron ore as the top money-maker for the world's biggest miner — a signal in itself of copper's rising importance in the energy transition.
What to watch next?
As of 10:34 Shanghai time, LME three-month copper was down 0.4% at $14,101.50/t; other base metals also edged lower.
Two key variables: ① when — or whether — US copper tariffs are formally announced; ② whether LME global warehouse stocks can sustain their rebound.
This means → as long as tariff expectations persist and restocking lags, near-term squeeze pressure is unlikely to ease materially.
Content is for reference only, not financial advice.