Copper Squeeze: A Great Story Playing Out as Expected

Jun 26, 2025

Gold and silver have generated a lot more buzz than copper in the past couple of years. But that might be changing.

On metals exchanges, copper inventories are falling while demand surges, leading to speculation that a “squeeze” will soon spike the metal’s price.

As Bloomberg reports:

Copper Faces Historic Squeeze With LME Stockpiles Depleting Fast
(Bloomberg) -- One of the copper market’s biggest-ever squeezes is unfolding on the London Metal Exchange, as rapidly declining inventories push up spot prices.
Spot copper traded at a $280-a-ton premium to three-month futures on Monday, hitting the highest level seen since a record spike in 2021. The huge spot premium — known as a backwardation — signals a supply shortage, and it comes after a rapid drawdown in LME inventories over the past few months.
Readily available inventories on the LME have declined about 80% this year, and now equate to less than a day of global usage.

Why Now?

It could be that China’s massive expansion into copper smelting is distorting the market:

Copper price: Chinese smelters ramp up exports, potentially squeezing home market too
(Mining.com) - After years of breakneck expansion Chinese copper refining suffers from overcapacity leading to competition for feedstock.
Copper is experiencing an historic squeeze as traders react to rapidly falling inventories, potential US tariffs, and a pricing crisis at smelters.
Copper smelters in China are so desperate to find raw material that they are paying miners for converting their concentrates into refined metal.

The copper squeeze could also be due to a broader structural imbalance: Everyone is building power-hungry AI data centers and/or upgrading local grids to handle the resulting surge in electricity demand. Getting from here to there will require far more copper than today’s mines produce.

So it’s reasonable to expect supply/price volatility in the short run and much higher prices over time. This is, in short, a great investment thesis playing out pretty much as expected.

The copper stocks in our Portfolio are doing okay…