Commodities: Copper
Copper maintained its steady grind higher last week, shrugging off most of the volatility in other pockets of the market. Day to day moves driven by the tension between genuine structural tightness (tariff-driven inventory flows, constrained mine supply, AI demand) and macro headwinds (hawkish Fed, stronger dollar).
Hi MM,
SFR +6.01%: Capped off a strong FY26 with earnings more than tripling as stronger copper production, pricing and operating performance flowed through the business – the share price today helped by a strong move in Copper overnight.
Copper’s latest surge reflects an increasingly tight physical market, with LME inventories falling for 40 consecutive sessions as traders divert and stockpile metal in the US ahead of potential tariffs on refined copper. The squeeze has pushed LME spot copper to a premium of as much as US$545/t over three-month futures, the steepest backwardation since the historic 2021 squeeze, as traders scramble for near-term supply against a backdrop of years of underinvestment in new mines.
The largest listed copper miner FCX soared over +7% on Friday night in US trade, its best one-day move since April last year, breaking out to new highs in the process.
Copper edged 0.6% higher last week to $14,160/t, but the main story was the significant tightening in the physical market. Falling LME inventories, US tariff-related stockpiling and mounting mine disruptions pushed the cash-to-3-month spread to a $416/t backwardation, the widest since 2021 and enough to prompt emergency measures from the LME. The broader backdrop remains supportive, with AI infrastructure demand, constrained supply and fading Fed hike expectations providing tailwinds. The main offset is China, where softer import premiums suggest high prices are beginning to curb demand.
If you were to build a portfolio of 5 ASX resources stocks (across base metals, precious metals and energy) what would be your highest conviction picks right now and why. Can be large cap and small caps.
S32 transformed its business last month through the planned sale of its aluminium, alumina and bauxite business to Alcoa in a deal worth up to US$5.6bn ($8.1bn), materially simplifying the company’s portfolio and accelerating its transition toward a future-facing base metals producer – discussed at the time here. Later in July, S32 delivered a solid fourth quarter update, discussed here, which has helped propel the stock towards fresh all-time highs.
Over the weekend China’s softer-than-expected CPI and PPI readings point to short term weaker domestic demand and ongoing deflationary pressures, a modest negative for copper with China remaining the world’s largest consumer of the metal.
Hi James,
