Copper prices are surging above later-dated futures on the London Metal Exchange, in a condition known as backwardation that’s a hallmark of a deepening squeeze on supply. Traders watch LME actions, fearing missteps could worsen the spike. The market’s backwardation indicates that nearby deliveries are scarce, prompting traders to pay premiums for immediate supply. Investors are also adjusting hedge positions, anticipating further price spikes in the coming months.

The main September-delivery contract jumped to a premium of more than $260 over October futures on Friday, the widest one-month spread since a historic supply squeeze seen in 2021. The surge reflects tightening mining output and increased industrial consumption, especially in renewable energy sectors, which could persist through the year.

The LME introduced emergency measures designed to contain a runaway rally in spot prices as the market tension escalated. Regulators are also reviewing the LME’s circuit breakers to ensure they can handle extreme price moves, aiming to prevent market destabilization.

Analysts say the spread may trigger margin calls, heightening volatility. If the spread remains elevated, producers may see improved margins, while end‑users could face higher costs for copper‑intensive products. Industry analysts warn that prolonged tightness could shift investment toward recycled copper and alternative materials.