Why the Copper Market Tightened in August 2026 — 9 Factors Behind the Squeeze

The nine factors driving the copper squeeze

1. Record price surge on Comex

The September 2026 Comex contract reached an intraday high of $6.7140/lb on August 12, equivalent to ~$14,800/tonne, a fresh all-time high for U.S. futures . The Wall Street Journal reported a record close of $6.7030/lb on August 5, eclipsing the prior record by about a nickel . The broader all-time intraday high for 2026 reached ~$6.83/lb in early August .

2. Extreme backwardation

On the LME, cash copper settled at $14,424.50/tonne on August 11 — a $207.50 premium over the three-month contract — having widened from just $34 at end-July and $138 the prior day . This signals acute short-term physical tightness: buyers paid enormous premiums for immediate delivery.

3. Inventory collapse

Available copper stocks in LME-registered warehouses nearly halved through July and early August. The share of Chinese-origin stocks fell from 59% in June to 42% in July . More than half of the copper in LME warehouses was under cancellation, meaning it was already earmarked for physical withdrawal . Total available stocks fell to 101,425 tonnes by end of July, the lowest level since January .

4. U.S. tariff-driven hoarding

Record U.S. copper imports exceeding 200,000 metric tons in July — the highest monthly volume in over a decade — drained available supply from the rest of the world . Massive volumes were diverted to the U.S. ahead of anticipated import-duty rulings by the Trump administration, tightening LME availability and pushing prices toward $14,000/tonne .

5. DRC concentrate export ban

The Democratic Republic of Congo, the world's second-largest copper supplier, banned exports of copper and cobalt concentrates under a June 29 ministerial order taking effect in early August. This triggered a sharp rally on the LME, with prices jumping toward $14,256/tonne on the news .

6. Indonesia's Gresik smelter outage

A shutdown at the facility handling ore from the massive Grasberg operation — one of the world's largest copper mines — intensified market tightness in mid-August. Customers were informed of a boiler leak on August 8, with operations halted and no timeline for restart .

7. Chile's Codelco disruptions

Ongoing production constraints and supply risks at Codelco, the world's largest copper producer, further constrained mine supply growth through 2026 .

8. EU sanctions on Russian copper

From July 25, 2026, amended EU sanctions prohibited the import of Russian copper and cobalt into the EU entirely. The LME issued a notice in June that Russian-origin copper could only be warranted in EU warehouses if imported before that cutoff date . This removed a meaningful source of deliverable supply from the LME European warehouse system.

9. Structural electrification demand

The International Copper Study Group and IEA both project that copper demand from electrification — EVs, grid upgrades, renewable energy, data centers — will vastly outpace mine supply growth, with warnings of a ~30% supply deficit by 2035. This structural narrative underpins the bull case, compels inventory hoarding, and discourages speculative short positions — amplifying the squeeze dynamic in both physical and futures markets.

The takeaway

The August 2026 copper squeeze was a textbook example of a market caught between near-term physical scarcity and long-term structural demand. With mine supply constrained by outages, trade policy redirecting metal flows, and inventories at critically low levels, even a small imbalance in the physical market can produce outsized price moves. Whether the backwardation persists or loosens will depend on how quickly disrupted supply chains return to normal — and whether the structural demand story continues to pull forward buying.

For traders and industrial buyers alike, the events of August 2026 serve as a reminder that in commodity markets, when available inventories vanish and the backwardation deepens, the squeeze can arrive faster than anyone expects.