Copper Squeeze Deepens In London As Futs Near Record; Barclays Flags Top Mining Picks

Copper prices in London have held above $14,000 a ton for nine consecutive sessions, with steep backwardation signaling that near-term demand is outstripping available supply. A confluence of bullish drivers is pushing prices toward record highs, while the key cash-to-three-month spread has widened to its highest level since the 2021 market squeeze.

The spot price traded as much as $543.50 a ton above three-month contracts on the London Metal Exchange, a hallmark of steep backwardation that signals near-term demand is outstripping available supply.

LME copper curve signals deep backwardation:

Three-month futures rose as much as 1.7% to $14,396 a ton on Monday, closing in on January's record of $14,527.50.

Richard Garchitorena, a New York-based Barclays equity research analyst covering North American metals and mining stocks, wrote Monday morning that mining stocks are poised for further gains as copper supplies continue to tighten.

Garchitorena said copper supplies remain constrained for a number of reasons: Chilean production fell 6.7% year over year through June, prompting Cochilco to cut its 2026 forecast to 5.27 million tons, down 2.6%. Antofagasta separately reduced its annual guidance by about 5% after severe weather disrupted its Los Pelambres mine. An outage at Indonesia's Gresik smelter has also delayed shipments, with no restart date established.

He added that LME copper stockpiles have plunged 32% from a month earlier to 205,000 tons, while Comex inventories rose 8% to 735,000 tons as traders await a potential U.S. tariff on refined copper. He also noted that speculative net-long positions increased to 77,123 contracts, up 20% from July.

Garchitorena's preferred individual mining stocks to watch include Freeport-McMoRan, First Quantum Minerals, Hudbay Minerals, Newmont and Agnico Eagle.

Global X Copper Miners ETF (COPX)

Separately, David Wilson, head of metals strategy at BNP Paribas SA, told clients, "There seems to be momentum for it to get there," referring to the potential for LME copper to exceed the January record. "It's moving into overbought territory, but I don't know if that means anything at the moment, given how tight it is."

"Normally you'd expect to get more Chinese deliveries into the LME," BNP's Wilson said. "But the thing is, why would you deliver to the LME when you can still effectively ship metal into the US?"

Bloomberg noted that the copper squeeze comes "ahead of the third Wednesday of the month delivery date, the main focus of liquidity in the LME's contracts. That may pile pressure onto traders with short positions."