Copper hit a record high on the London Metal Exchange (LME) as price spreads surged, reflecting a tightening supply. The spot price reached $545 above the three-month futures contract, the widest backwardation since 2021, signaling a severe supply squeeze. LME stockpiles fell to near 200,000 tons, the lowest since February, driven by surging US shipments amid tariff speculation and China’s weak demand.

The $14,500+ peak in futures prices, up 1.7% to $14,179, underscores acute scarcity. Analyst Ewa Manthey of ING Groep NV warned that supply constraints would likely persist if demand remains strong, fueled by electrification, data centers, and AI infrastructure. Traders are hoarding copper due to lucrative arbitrage opportunities from potential US tariffs, exacerbating the shortage.

Market dynamics include unbalanced inventories, with most stockpiles in the US. China’s smelters face feedstock shortages, increasing import needs. The LME’s third Wednesday liquidity event amplified volatility as short sellers covered positions. Aluminum and zinc also rose, aided by a weaker dollar.

Analysts expect continued price support unless new supplies emerge, particularly from China, which historically offsets short-term pinches.