How Tariff Fears, Chilean Storms, and a Global Supply Squeeze Pushed Copper to an All-Time High of $6.7045/lb

Traders were awaiting a decision from President Trump on whether to impose import tariffs on refined copper. The Commerce Secretary had delivered an updated recommendation by June 30, but a final ruling was still pending . In anticipation, more than 200,000 tons of copper arrived at US ports in July 2026 — the largest monthly volume on record in IHS Markit data going back to 2014 — as importers rushed to bring metal in before any tariff deadline . Front-month Comex December 2026 futures traded at a premium of roughly $800/tonne over LME, reflecting the market pricing in significant tariff risk .

2. Chilean Winter Storms Disrupted Global Supply

Deadly winter storms — heavy snow, flash flooding, and high winds — struck Chile's mining belt in late July 2026, killing 13 people and disrupting operations at major mines including Codelco's El Teniente, Anglo American, Antofagasta, and Lundin Mining . Chile accounts for more than a fifth of global copper output, so any disruption tightens an already strained supply picture . Codelco, the world's largest copper producer, had been struggling with declining output even before the storms; the extreme weather compounded its production shortfall . Supply disruptions also hit other major mines globally in 2026 — including flooding at Kamoa-Kakula in the DRC and an accident at Grasberg — keeping global concentrate supply extremely tight .

3. The Comex-LME Spread Blew Out to Historic Levels

The Comex-LME spread widened sharply to around $400–$600/tonne in mid-2026, and later to ~$800/tonne for deferred futures, reflecting the acute tariff-driven dislocation in the US market . By comparison, the spread had historically averaged less than 1% . This dislocation created a fragmented global copper market: US prices disconnected from London and Shanghai, with traders profiting from arbitrage while physical metal accumulated in American warehouses and drained from the rest of the world .

4. Chinese Inventories Collapsed and Restocking Premiums Surged

On the Shanghai Futures Exchange (SHFE), deliverable copper stocks collapsed 82% since early May, and the Yangshan import premium — a key gauge of Chinese demand — surged from $20/tonne in January to a four-year high of $115/tonne by late July . This signaled aggressive Chinese restocking amid a global shortage, even as the SHFE futures curve became steeply backwardated . A key Chinese manufacturing gauge hit a one-year high, further adding upward price pressure .

5. Structural Tailwinds: AI, Electrification, and Geopolitical Risk

Beyond the immediate triggers, long-term demand narratives underpinned copper's bull case. AI data center infrastructure and power grids — both highly copper-intensive — continued to drive consumption expectations globally . The clean energy transition, including electric vehicles and renewable energy build-out, added structural demand growth . Additionally, a push to reopen the Strait of Hormuz after diplomatic developments boosted risk appetite across commodity markets .

Making Sense of the Record Rally

The August 2026 all-time high was not the result of any single trigger. Instead, it reflected a rare intersection of tariff-driven market distortion (massive US stockpiling and a historically wide Comex-LME spread), acute physical supply shortages (Chilean storms, Codelco's production woes, collapsing SHFE stocks), and robust structural demand narratives (AI, electrification, and geopolitically driven risk appetite). As TD Securities senior commodity strategist Ryan McKay put it, record imports and a strong arbitrage meant the fragmented market would continue to support prices until the tariff decision was resolved .