What is causing the current copper supply squeeze reflected in the LME's widening backwardation and record-low inventories?

The current copper supply squeeze is driven by a 42-day consecutive decline in LME warehouse stockpiles — the longest since 2014 — leaving inventories at 204,975 tons, with nearly half already earmarked for withdrawal; this scarcity is intensifying backwardation (e.g., the September contract trading at a $260+ premium over October futures, the widest one-month spread since 2021), forcing short futures holders into bidding wars to secure physical metal, while parallel arbitrage flows to the US (anticipating Trump-era tariffs) and import-dependent Chinese buyers (due to smelter feedstock shortages) further drain available supply.

Why are LME copper prices surging, and what does the record cash contract level indicate about market conditions?

LME copper prices are surging due to acute physical scarcity — evidenced by extreme backwardation, collapsing inventories, and tightening availability of deliverable metal — pushing the benchmark three-month contract to over $14,100/ton (up nearly 14% year-to-date) and cash contracts to a record near $14,500/ton; this reflects a market where immediate physical demand vastly outstrips readily available supply, prompting emergency LME measures and fueling expectations of new all-time highs as structural deficits loom from constrained mine output and rising demand from EVs, renewables, and data centers.