Copper's Longest Rally Since 1994 Meets Shrinking Supply Chain

September 7, 2026 at 10:00 PM3 min

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Copper prices extended their longest weekly winning streak since 1994, with London Metal Exchange benchmark trading near $14,300 a ton after a 10th straight weekly gain. The rally is colliding with a shrinking physical supply chain, as LME warehouse stocks fell for 42 consecutive days through mid-August. The squeeze traces back to the Sept. 8, 2025 Grasberg mine disaster in Indonesia, which forced Freeport-McMoRan to cut 2026 output guidance by roughly a third.

Key Facts

LME copper prices rose for a 10th straight week through last Friday, trading near $14,300 a ton and within reach of the record $14,527.50 set in January.
LME warehouse stocks fell for 42 consecutive days through mid-August, the longest stretch since 2014, with nearly half of remaining inventory already earmarked for withdrawal.
Freeport-McMoRan cut 2026 output guidance at the Grasberg mine by roughly a third after the Sept. 8, 2025 flood that killed two workers and triggered force majeure.
Global mine output fell 1.1% in the first half of the year, with Codelco and Freeport both posting double-digit declines, according to International Copper Study Group data.
Roughly 200,000 tons of refined copper entered the U.S. in July, the largest monthly inflow on record, pushing Comex inventories past 1 million tons as buyers race to beat a possible 15% tariff.

Supply Chain Squeeze

The physical copper market has tightened sharply as LME warehouse stocks fell for 42 straight days through mid-August, the longest stretch since 2014. Nearly half of the remaining LME inventory is already earmarked for withdrawal, leaving little metal available to the market. Global mine output fell 1.1% in the first half of the year, with Codelco and Freeport both posting double-digit declines, according to International Copper Study Group data. Chile, the world's top producer, logged its weakest second quarter in at least 19 years and has cut its 2026 forecast twice, to a 2.6% decline.

Grasberg Disaster Aftermath

On Sept. 8, 2025, roughly 800,000 tons of wet material flooded Freeport-McMoRan's Grasberg mine in Indonesia, the world's second-largest copper source, killing two workers. Freeport has cut 2026 output guidance at the complex by roughly a third, and a full recovery is not expected before 2027 or 2028. Codelco's Andes Norte expansion at El Teniente, meant to help offset losses from last year's fatal tunnel collapse, is not due to reach production until 2029. BlackRock's Evy Hambro said of the sector last month: "It's declining grades at existing operations. It's tired, very, very old assets."

Tariff Uncertainty and U.S. Imports

The Commerce Department's deadline to recommend whether to extend tariffs on refined copper passed June 30, and more than two months later, the White House still has not decided. Roughly 200,000 tons of refined copper flooded into the U.S. in July alone, the largest monthly inflow on record, pushing Comex inventories past 1 million tons. Buyers are racing to beat a possible 15% duty that could take effect as soon as January. Morgan Stanley still expects refined output to inch up almost 1% this year even with mines producing less, as smelters lean harder on scrap.