Copper Spikes to Almost $13,000 as the LME Resumes Business

On Monday, the price of copper experienced a major spike on the London Metal Exchange as the LME resumed business after the Boxing Day holiday on Friday. This spike on the LME was expected given the rally that had happened in the U.S. on the Comex marketplace as last week ended.

Benchmark prices on the LME jumped to $12,960 per ton before easing back slightly as a result of subdued trading on the day due to the ongoing holiday season-induced lull in activity.

This sharp upward move in the price of copper is likely to be a concern to the manufacturing sector since the metal is a key input for makers of copper wiring, industrial equipment, power grids and many other consumer goods.

Traders and analysts suggest that concerns about supply could be inaccurate to some degree due to the existing market distortion caused by a lot more copper being shipped to the U.S. in anticipation of possible tariffs on the metal in 2026. That frontloading has made U.S. warehouses linked to exchanges in America to hold a lot more copper than the immediate needs of the country call for.

Records put current stocks in COMEX-linked warehouses at about 400,000 tons, which is way more than the inventories that are usually held in the country. As a result of this dislocation, other commodity markets in London and Shanghai are running low on stocks as traders opt to send the metal to the U.S.

For this reason, analysts say concerns about supply may be hard to justify since the copper needed is available, only that excesses of it are being held in a market where those supplies aren’t immediately needed.

That said, one cannot ignore the impact of news filtering through that China is considering putting a cap on the growth of copper capacity in the country when it releases its new 5-year plan. This news led prices in Shanghai to shoot up to $14,105 as traders anticipated a production squeeze at smelting plants.

Disruptions at major copper mines around the world haven’t helped matters either. With so many mines seeing ore grades degrading and yet the process to start production at new mines is such a long one, the supply outlook for the coming years is clouded.

This current situation of aging mines and tariff concerns amid exploding demand is setting up exploration firms like Torr Metals Inc. (TSX.V: TMET) for a possible surge in investor interest as capital is directed toward companies that are well positioned to deliver new deposits of copper to meet the rapidly growing demand for the red metal.

NOTE TO INVESTORS: The latest news and updates relating to Torr Metals Inc. (TSX.V: TMET) are available in the company’s newsroom at https://ibn.fm/TMET

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