Commodity trading giant fuels the fire: Mercuria reportedly planned to withdraw over 40,000 tons of copper from LME warehouses

News from a commodity trading giant is adding fuel to the recent copper price surge. If true, it would intensify market concerns about a global copper supply shortage and could further drive copper prices to historic highs.

According to media reports from Thursday, June 4, Eastern Time, Swiss commodity trader Mercuria has issued a notice to withdraw more than 40,000 tons of copper from the London Metal Exchange (LME) warehouses in Asia, worth about $460 million at recent prices.

Some sources revealed to the media that on Tuesday, December 2, Mercuria canceled or marked over 40,000 tons of copper stored in LME warehouses in South Korea and Taiwan. This move will increase the premium of spot copper contracts over three-month copper futures, reflecting traders’ growing demand for physical copper. Mercuria declined to comment.

Coincidentally, analysis pointed out that this Wednesday, the canceled LME warehouse warrants in the Asian region reached 50,725 tons, setting a new high since 2013.

The day before the above news came out, copper prices on the LME already rebounded sharply. On Wednesday, LME copper closed up by $342, a rise of nearly 3.08%, at $11,488/ton, and hit a historical intraday high of $11,540, crossing $11,500 for the first time. This trading session marked the third time in four days that copper futures hit a record closing high.

On Thursday, LME copper edged down, closing $38 lower, a drop of over 0.3%, at $11,450/ton. The cumulative gain for the year remains around 30%.

The main driver behind the recent record highs in copper prices is the soaring expectation of a supply shortage. This partly stems from supply interruptions at copper mines in Indonesia and Chile, combined with accelerating demand growth. Meanwhile, large quantities of metal are flooding into the US market due to tariff expectations under the Trump administration, putting inventories in other regions at risk of depletion. Analysts believe that the surge in canceled warrants at LME's Asian warehouses reflects two main drivers: US tariff expectations and cross-market arbitrage opportunities.

Mine Disruptions Worsen Supply Tightness

On the fundamentals side, a series of mine outages from Chile to Indonesia have tightened supply this year. Wednesday saw new signs of tension.

Ivanhoe Mines cut its output forecast at the Kamoa-Kakula mine in the Democratic Republic of Congo, which is still recovering from floods earlier this year. Glencore’s output has been down 40% since 2018; the company also lowered next year’s output target but said it aims to roughly double output over the next decade.

Most copper in the LME warehouse network comes from China or Russia. Chinese copper is restricted by US import tariffs, while Russian copper is banned from entering the US. However, these supplies can still serve Asian customers, meaning copper flowing to countries like Chile or Japan can be transshipped to the US.

This Wednesday, all LME-traded metal futures generally closed higher, with tin, which had dropped for two sessions, rising over 4% to lead gains. LME tin futures rose $1,740, up more than 4.45%, to $40,780/ton. This marks the fourth time in six trading days that tin has hit a three-year high.

The year-end rally in LME tin stems from severe supply restrictions in Myanmar and Indonesia, the world’s largest and second-largest tin producers, alongside strong demand expectations in the electronics and new energy sectors, causing an extremely tight supply-demand balance.

Tariff Expectations Trigger Global Supply Reshuffle—Mercuria Warns "No Copper Available"

Copper prices have risen over 30% this year, with the recent surge mainly driven by uncertainty over US tariff policy. In February, President Trump formally proposed copper tariffs, pushing US copper imports to a record high. In late July, he announced tariffs would be restricted to copper processed products and promised to review whether to tax commodity grade copper in 2027.

This decision has had a huge impact on the physical market. With US futures prices soaring, traders ramped up shipments of copper to US ports. Producers have announced record premiums for European and Asian clients next year, meaning buyers are effectively compensating for extra profits they could have earned by selling to the US.

Mercuria recently warned these trading dynamics could cause a severe global supply shortage in the first quarter next year, predicting copper prices will break new ground.

Wallstreetcn mentioned last week that Mercuria’s head of metals, Kostas Bintas, called the current situation a “golden opportunity” for copper bulls, emphasizing that if the current trend continues, other regions will face the predicament of having “no copper available.”

TD Securities senior commodity strategist Dan Ghali said: “In the first half of next year, the persistent threat of tariffs is the most certain catalyst for copper’s price rise. The microstructure of the market will ensure that the motivation to withdraw metal from global inventories lasts for months, inadvertently depleting or shifting global stocks.”

Divergence in Institutional Views on Copper Prices

Although copper prices have soared this year, there is disagreement about the outlook. Goldman Sachs gave a cautious tone in its report on Wednesday, saying copper's breakthrough past $11,000/ton will be short-lived, as global metal supply is still sufficient to meet demand.

Goldman analysts led by Aurelia Waltham wrote: "Most of the recent copper price rise is based on expectations of future market tightness, rather than current fundamentals. We expect this surge past $11,000/ton will not last."

Goldman expects a copper supply surplus of about 500,000 tons this year, and says Chinese demand has “significantly slowed” in recent months. They also forecast that there will not be a shortage in the copper market until 2029.

Goldman raised its price forecast for copper in the first half of next year, saying US tariff dynamics will support prices, but recommends using higher regional premiums and tighter LME differentials to prevent stocks outside the US from falling to “extremely low” levels.

Goldman expects copper prices in 2026 will “be limited” to between $10,000 and $11,000 per ton.

However, Mercuria's Bintas remains bullish. He notes that while Chinese buyers are currently hesitant about the high prices, they will ultimately be forced to accept them. He states that what seems expensive today may look cheap in a few weeks.

Mercuria expects US copper import speeds in Q1 2026 will be comparable to the record pace in Q2 2025, when imports exceeded 500,000 tons.

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