Copper Just Hit a Record High--and This May Be Just the Beginning

This article first appeared on GuruFocus.

Copper's surge to a record high has caught global markets off guard, as traders position ahead of a possible breakthrough in US-China trade talks. Three-month futures climbed to $11,146 a ton on the London Metal Exchange, marking a new all-time high and extending copper's year-to-date gains to more than 25%. The rally comes just as President Donald Trump prepares to meet President Xi Jinping at the APEC summit in South Korea, where both leaders are expected to discuss easing trade tensions. Analysts say the anticipation of a dealcombined with tightening supplyhas set the stage for what could be copper's strongest cycle in decades.

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Morgan Stanley now forecasts the biggest copper deficit in 22 years, warning that years of under-investment are colliding with a wave of mine disruptions. Freeport-McMoRan (NYSE:FCX) has been hit by a mudslide at its massive Grasberg operation in Indonesia, while Anglo American has trimmed production guidance for its flagship mine. From South America to Central Africa, disruptions have become increasingly frequent, draining stockpiles tracked by the LME to their lowest level since July. CRU Group's Craig Lang said the current price momentum reflects a pick-up in risk appetite as investors factor in both trade optimism and persistent physical tightness outside the US.

Beyond the short-term squeeze, demand drivers are reshaping the story. Copper could be entering a structural bull phase powered by electrification, clean-energy buildouts, and the explosive growth of AI data centersall sectors hungry for wiring and conductivity metals. China has also pledged to boost domestic consumption, adding another layer of potential demand. A softer US dollar and speculation that the Federal Reserve may cut interest rates again this week have added further fuel, making dollar-priced commodities more attractive. As one analyst put it, copper's record run isn't just about geopoliticsit's about the world's next wave of industrial transformation.

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